Three essays on audit policies.

Summary This thesis focuses on the study of auditing policies for field and laboratory experiments. In particular, we focus on a particular auditing rule, called "crackdown", which is the concentration of systematic or high-frequency audits in a limited amount of time, and/or in a bounded geographic area or subset of the population. Although it has obvious implications and many applications, economists have shown little interest in this type of measure. In this thesis we study the effectiveness of different types of crackdowns. The first test asks whether there is an alternative way to improve the efficiency of crackdowns in a public good game in which contributing less than the average of other group members is punished and the probability of a check is unknown. We find that, under ambiguity, an intermittent control scheme can maintain the same level of cooperation compared to a systematic control scheme while being less costly. The second essay provides an in-depth study of the relative effectiveness of various crackdown policies using a laboratory field experiment with real passengers on a public transportation service. We introduce a novel game, the public transportation game, where participants have to decide, over several time periods, whether to purchase a ticket knowing that there may be a check. The main result is that sustained crackdowns are less effective than random checks. We also observe that actual fraudsters defraud more than non-fraudsters. The third essay develops a model studying the effectiveness of endogenous crackdowns, i.e., the sudden and dramatic increase in audit probability triggered by a low level of detected compliance. We test this model experimentally. Our results show that: (a) compliance with the rules reacts quickly to the appearance of crackdowns . (b) participants report more than half of their income, even during periods without crackdowns . (c) crackdown announcements increase compliance both ex ante and ex post. (d) participants are able to coordinate quickly to end crackdowns.