The question is, does punishment really work as a deterrent in this case? Assume that the penalty for fraud were lifetime prison or even death, but it only ever

The question is, does punishment really work as a deterrent in this case? Assume that the penalty for fraud were lifetime prison or even death, but it only ever got applied to 0.1% of the people committing it. I don't think that would deter anyone. But a realistic chance (maybe even 10%) of losing your wealth, career and reputation would. Maybe even that is not needed, and you can build enough transparency into the system that violating trust (game theoretic defecting) becomes worthless compared to other options. My point is, punishment for the sake of punishment is not in our interest. And sure, there is some value in creating a deterrent, but usually there are better ways to set incentives than just coming up with the meanest scariest deterrent you can think of and having that hanging over people's heads.