In challenging the methods of research that has concluded threats of legal sanctions are more effective in deterring offenders involved in economic crimes than with delinquents who commit more conventional crimes, the current study conducted a randomized field experiment in four insurance companies to incorporate contextual factors into the dynamics of deterrence.
Previous research on this issue rests on weak empirical evidence. Also, most studies that support this deterrence proposition were conducted with non-experimental designs, thus undermining the interval validity of the results. In addition, studies of this issue have based their predictions on individual factors and do not incorporate contextual factors. In addressing these research flaws, the current study assessed the effect of a written threat (a deterrent letter reminding insured persons of the punishment for insurance fraud) on claim padding behaviors of insured persons filing claims for residential theft. A deterrent-letter project was implemented in four insurance companies, with claims randomly assigned to the experimental or the control group. Cases belonging to the control group were managed as usual, while individuals in the experimental group received the written threat. The experimental design made sure that the deterrent stimulus was delivered to the insured persons when they had the opportunity to exaggerate the value of their claims. Findings indicate that claimants in the experimental group were less likely to pad their claims than were those in the control group. The letter was effective, regardless of the means of delivery. The study concludes that the administration of a written threat at the time of criminal opportunity is apparently an effective strategy for preventing economic crimes. (publisher abstract modified)
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