DP14476 Encouraging Others: Punishment and Performance in the Royal Navy

Author(s): Hans-Joachim Voth, Guo Xu
Publication Date: March 2020
Keyword(s): Labor incentives, Principal agent problems, punishment
JEL(s): D91, J20, N33
Programme Areas: Labour Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14476

Can severe penalties "encourage the others"? Using the famous case of the British Admiral John Byng, executed for his failure to recapture French-held Menorca in 1757, we examine the incentive effects of judicial punishments. Men related to Byng performed markedly better after his unexpected death. We generalize this result using information from 963 court martials. Battle performance of captains related to a courtmartialed and convicted officer improved sharply thereafter. The loss of influential connections was key for incentive effects â?? officers with other important connections improved little after Byng's execution or other severe sentences.