Tempting righteous citizens? Counterintuitive effects of increasing sanctions in the realm of organized crime

This paper demonstrates that increasing the expected sanction for a crime may increase this crime's prevalence, using a principal–agent model with different kinds of crime that is typical of organized crime. The intuition for the finding is that the policy change may increase the principal's expected payoff from crime by decreasing the information rent required by the agent.

► This paper considers a principal–agent pair engaged in crime. ► Increasing the expected sanction may increase this crime's prevalence. ► Harsher sanctioning may increase the principal's expected payoff from crime. ► This possibility is due to a decrease in the agent's information rent.