CFDP 2143R

Slippery Fish: Enforcing Regulation when Agents Learn and Adapt

Publication Date: August 2018

Revision Date: March 2021

Pages: 89

Abstract: 

Attempts to curb undesired behavior through regulation gets complicated when agents can adapt to circumvent enforcement. We test a model of enforcement with learning and adaptation, by auditing vendors selling illegal fish in Chile in a randomized controlled trial, and tracking them daily using mystery shoppers. Conducting audits on a predictable schedule and (counter-intuitively) at high frequency is less effective, as agents learn to take advantage of loopholes. A consumer information campaign proves to be almost as cost-effective and curbing illegal sales, and obviates the need for complex monitoring and policing. The Chilean government subsequently chooses to scale up this campaign.

Keywords: Enforcement, Regulation, Law and Economics, Fisheries

JEL Classification Codes: K42, O1, L51

JEL Classification Codes: K42L51