Horseshoes, hand grenades, and regulatory enforcement: Close experience with potential sanctions and fraud deterrence

We investigate the deterrence effect of experience with regulatory enforcement on fraud in a unique natural setting. Using ride-level data on New York City taxicab drivers, we identify drivers who fraudulently overcharge customers and pair them with the outcomes of drivers’ experience with regulatory enforcement (taxi court). We examine whether drivers’ experience with the taxi court, specifically whether the taxi court found them guilty or not...