Deterrence Through Word of Mouth

Rincke, Johannes; Traxler, Christian

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Deterrence Through Word of Mouth

Rincke, J., & Traxler, C. (2009). Deterrence Through Word of Mouth.

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Item Permalink: http://hdl.handle.net/11858/00-001M-0000-0028-6F86-C Version Permalink: http://hdl.handle.net/11858/00-001M-0000-0028-6F87-A

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http://www.coll.mpg.de/pdf_dat/2009_04online.pdf (Preprint)

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Creators:
Rincke, Johannes, Author
Traxler, Christian¹, Author

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1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688

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Abstract: The deterrent effect of law enforcement rests on the link between the actual and the perceived detection risk. We study the role of word of mouth for this linkage. Our approach makes use of micro data on compliance with TV license fees allowing us to distinguish between households who have been subject to enforcement and those who have not. Exploiting local variation in field inspectors' efforts induced by snowfall, we find a striking response of households to increased enforcement in their vicinity, with compliance rising significantly among those who had no interaction with inspectors. As we can exclude other channels of information transmission, our finding establishes a substantial deterrent effect mediated by word of mouth.

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Dates: Published in Print: 2009

Publication Status: Published in print

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Publishing info: Bonn : Max Planck Institute for Research on Collective Goods

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Identifiers: Other: 2009/04

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