3 ms·

Can't we make fines high and give anyone that reports fraud a cut of penalty?

• jaggederest 8y ago
  There's a similar concept to a Pigovian tax for fines, I think of it as a "Pigovian fine", which is the price at which the likelihood of getting caught times the fine exceeds the cost to pay the tax directly. So if you have a 1% chance of getting caught, the fine needs to be 101x the tax. This is why so many e.g. banking and consumer protection fines fail to achieve their goal - the cost of adhering is more than the probability of getting caught times the fine, so it's economically rational to not pay.