Leniency programs contribute to destabilizing collusion, however offering generous leniency might risk being exploited to perverse effects. This paper develops a simple model to resolve this trade-off in the design of leniency programs, which allows us to relate the optimal leniency policies to the frequency and effectiveness of investigations. We show that it is always desirable to offer some ...

Some researchers assume that employees' personality characteristics affect leniency in rating others and themselves. However, little research has investigated these two tendencies at the same time. In the present study we developed one index for other-rating leniency and another one for self-rating leniency. Based on a review of the literature, we hypothesized that a generous assessment of peer...

We investigate the effects of an institutional mechanism that incentivizes tax payers to blow the whistle on collusive corruption and tax compliance. We do this through a leniency program. In our experiment we nest collusive corruption within a tax evasion framework. We not only study the effect of the presence of such a mechanism on behavior, but also the dynamic effect caused by the introduct...

Leniency programs have become widespread and are generally quite active as reflected in the number of applications. What is not well understood is how they affect the number of cartels. This paper develops and explores a theoretical framework to help understand when leniency programs are likely to be effective in reducing the presence of cartels. Plausible conditions are derived whereby a lenie...

Fuzzy measures have been widely used to determine the degrees of subjective importance of evaluation items. However, the leniency error may exist when most attributes are assigned unduly high ratings. Because respondents often assign similarly complimentary scores, errors of positive leniency make it difficult to differentiate the importance of decision attributes. To reduce positive leniency i...

We develop a simple framework for analyzing the optimal design of leniency programs, which allow cartel members to denounce their collusive agreements. We highlight a basic trade-off between two opposite forces: leniency can destabilize cartels, by encouraging firms to report and bring evidence to the antitrust authority, but it can also reduce the expected penalties that cartel members face. W...

Early jury simulation research, reviewed and meta-anyalysed by MacCoun and Kerr (1988), suggested a leniency asymmetry in criminal jury deliberations such that a given faction favoring acquittal will tend to have a greater chance of prevailing than would an equivalent sized faction favoring conviction. More recently, a handful of field studies of actual juries have reported either no such lenie...

We develop a simple model of cartel behavior under conditions of Bertrand competition with differentiated products. This model is then used to analyse the effects of ”Leniency Policy” on the cartel. We find that in some market situations introducing Leniency Policy causes the cartel to cease to be viable and competition results. However, in other cases the policy only serves to raise cartel pri...

We analyze the impact of leniency programs on the behavior of firms participating in illegal cartel agreements in a two-stage repeated game model. Our approach takes into account asymmetric punishment effect and allows to discuss the design of leniency programs in the setting with asymmetries. The main contribution of the paper is that we consider heterogeneous firms. This heterogeneity results...

Previous research exploring the effect of corporate leniency programs has modelled the oligopoly stage game as a Prisoners’ Dilemma. Using numerical analysis, we consider the Bertrand price game and allow the probability of detection and penalties to be sensitive to firms’ prices. Consistent with earlier results, a maximal leniency program necessarily makes collusion more difficult. However, we...