The Sanction Threat White-Collar Crime · Crime Lab 4 · Midwestern State University

The respondent's own moral code. Net of every cost and benefit they measured, the belief that the act was wrong was the single best predictor of intentions, with a t-ratio of -3.38, ahead of career advancement. The authors' phrase for this is a "deontological source of conformity": people held back by a rule, not by a calculation. Their second finding follows from it. When moral inhibitions were high, the costs and benefits of the act were "virtually superfluous." Those acts sat in what they call nonmarket areas, where no price is being computed. When moral inhibitions were weak, the sanction threats and the benefits did their work.

What the randomized details did. Intentions were higher when the act would save the firm a large sum, give it a chance to challenge a disliked law, or help against foreign competition; when it was common practice within the firm; and when a supervisor ordered it. Intentions were lower when the respondent perceived a real risk of formal or informal sanctions for themselves. Two details that seemed obvious had no effect: the prospect of a promotion, and being noticed by top management. And sanctions aimed at the company deterred only by raising the perceived cost to the individual; once the individual's own risk was in the model, the firm-level sanction dropped out. Respondents were also more willing to fix prices or pay a bribe than to violate an emissions standard.

Piquero, Exum, and Simpson (2005) added a personality trait. Using the same scenario method, they found that a person's desire for control over events was itself associated with higher intentions to offend, over and above the rational choice variables. The manager who needs to be in charge of outcomes is more willing to break a rule to secure them. That is a trait, not a calculation, and it sits alongside moral belief as something the sanction threat does not reach.

Sources: Paternoster, R., and Simpson, S. (1996). Sanction threats and appeals to morality: Testing a rational choice model of corporate crime. Law and Society Review, 30(3), 549-583 (sample and design, pp. 557-558; Table 1A dimensions, pp. 559-560; scenario-dimension results, p. 568; individual-level results, pp. 571-572; the t = -3.376 figure and firm-level sanctions working through individual cost, p. 573; nonmarket areas, pp. 574-576; appendix scenarios, pp. 580-581). Piquero, N. L., Exum, M. L., and Simpson, S. S. (2005). Integrating the desire-for-control and rational choice in a corporate crime context. Justice Quarterly, 22(2), 252-280.

Multiple treatments. With one exception, the single strategies had minimal to no deterrent impact at either level. The exception was regulatory policy, which had a significant effect at the company level but not consistently across study types. Interventions that combined strategies produced a consistent, significant deterrent effect on both individual and corporate offending. The moderator analysis added a caution: older and less rigorous studies were more likely to report deterrence than newer experimental ones. The authors' conclusion is that a mix of agency interventions is likely to have the largest impact, which is the logic of the enforcement pyramid you will meet in Week 15.

Put the two readings together. Paternoster and Simpson show that a sanction aimed at the company deters only insofar as a manager inside it perceives a cost to themselves. Schell-Busey and colleagues show that a single instrument, whether a law or a penalty, rarely moves the numbers on its own. Both point the same way: deterrence of corporate crime runs through the perceived certainty of consequences for the individual decision-maker, and that certainty is built by several instruments working at once, not by a large fine.

Source: Schell-Busey, N., Simpson, S. S., Rorie, M., and Alper, M. (2016). What works? A systematic review of corporate crime deterrence. Criminology and Public Policy, 15(2), 387-416 (abstract and summary of findings; you have the 2017 ComplianceNet working paper version).

Two answers are defensible, and the tension between them is the lesson. The individual-first instruction is the one Paternoster and Simpson's model predicts will matter, because sanctions deter through the perceived cost to the person deciding, and a policy that says the person will be charged raises that cost directly. But the priority list works the other way. A manager fixing prices in an industry that is not on the list, or violating an emissions standard, has just been told that federal attention is elsewhere, and TRAC's count shows what that looks like in practice: white-collar prosecutions fell to a projected 3,862 in fiscal 2025, the lowest on record, with a prosecution rate of 24 percent of referrals. Certainty is not set by a memo's stated intent. It is set by what the manager believes will happen, and the manager reads the whole document.

The declination path is the part that speaks to the firm, not the person. A company that discovers misconduct and reports it can now expect to avoid prosecution if it cooperates and remediates. Paternoster and Simpson's data say that matters only if it changes what the manager expects for themselves, and a company that self-reports usually does so by handing over the individuals involved. So the declination policy may raise individual certainty inside firms that adopt it, and lower it everywhere else. Whether that nets out to more or less deterrence is an empirical question that Schell-Busey's review says no single study will settle.

Sources: U.S. Department of Justice, Criminal Division, Memorandum from Matthew R. Galeotti, Head of the Criminal Division, Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime, May 12, 2025 (available on justice.gov; the quoted phrases are from the sections on priorities, individual accountability, the Corporate Enforcement and Voluntary Self-Disclosure Policy, monitors, and resolution length). TRAC, Federal Prosecution of White-Collar Crimes Receiving Less and Less Attention, May 23, 2025.