Premium
The Importance of Being Honest *
Author(s) -
KEMP MURRAY C.,
NG YEWKWANG
Publication year - 1979
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1979.tb02200.x
Subject(s) - conviction , enforcement , law enforcement , economics , microeconomics , law and economics , law , political science
Given individual propensities to cheat (stealing, overcharging, etc.), the optimality conditions for the amount of resources devoted to law enforcement and for the severity of penalties on convicted cheats are derived. In some interesting cases, the optimal penalty equals the market price divided by the probability of conviction and it is optimal to spend very little on enforcement and impose a severe penalty. These conclusions seem to apply to the practical case of metered parking violation.