Check in the Dark

Faculty Research Director

Dan Nielson

Project Team Leads

Zhizhen Lu

In the US, companies are entrusted with the responsibility to self-police compliance with economic sanctions, ensuring that business activities do not undermine national security. However, such compliance activities are costly to do, as it requires firms to pay for services and hire special teams. Meanwhile, the value of private compliance is also not obvious if firms do not breach sanction restrictions. So what motivates firms to commit to costly compliance activities ex ante? Collaborating with a sanction compliance service provider in their client outreach, we conduct an audit experiment to test what messages increase firms’ interest in understanding and potentially subscribing to compliance services. We use theoretically-motivated messages that capture different compliance motivations—reward, penalties, and ethics—and randomly assign potential clients into different messages based on their size, revenue, and sectors. We then measure the compliance outcome using website clicks and signup for the company’s product demos.