This article revisits the Bowles-Garoupa model with regard to corruption and crime. We interpret additional costs inflicted on a caught corrupt fficer as psychological costs, and we incorporate social norms into these psychological costs. In he Bowles-Garoupa model, the deterrent effect of raising fines on crime is weakened but is not perverse in the presence of corruption. Here, due to the 'snowballing' character of social norms, raising fines could be counterproductive in deterring crimes if the status quo corruption is widespread. As a corollary, the optimality of the maximal fine suggested by Becker need not be true even if corruption is harmless.
International Review of Law and Economics,20(1),35-51