Publisher:
Max Planck Institute for Research on Collective Goods, Bonn
This paper studies the differential effects of fines and damages on people's investment in accident prevention. We report results from a laboratory experiment in which monetary payoffs are maintained across the two policy instruments. While standard...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 62
Inter-library loan:
No inter-library loan
This paper studies the differential effects of fines and damages on people's investment in accident prevention. We report results from a laboratory experiment in which monetary payoffs are maintained across the two policy instruments. While standard theory predicts no difference in behavior, we find that potential injurers invest substantially more money in accident prevention when they are subject to damages instead of a fine. We discuss possible behavioral channels that may explain our findings.
