The Interplay of Certainty, Severity, and Celerity in Punishment for Wrongdoing

This is a conference version and should not be cited or published in any form without permission from the authors. ABSTRACT While the deterrent effect of certainty and severity of punishment in addition to the interaction between the two has been evaluated for various criminal behaviors, few have assessed the influence of the celerity of punishment, or the additive influence of the interactions among those three factors. The objective of this paper is to gain insights on managerial decision-making to deter fraud using an alternative method that can simultaneously consider the three conditions. Using the case of vendor fraud in an Ohio health service delivery program, computer experiments generated three managerial decision hypotheses: First, to observe a reduction in fraudulent vendors, punishment with low certainty must be accompanied by high celerity. Second, severity becomes important in the long run when it is associated with low certainty and high celerity, but not with low certainty and low celerity. Finally, if punitive policy actions are taken on more than half of the fraudulent vendors identified in the system, the increase in certainty brings only a marginal effect. We discuss some policy insights to help a public agency design punitive actions given their goals and resources.