NBA coach Phil Jackson has a system of player fines for minor infractions. Apparently millionaire athletes hate forking over cash out of their wallet for arriving late.
Jackson has found that players are more grudging about having to pull cash out of their own pocket on the spot, than having a larger fine deducted from a paycheck, as is the usual practice.
Given this, you would think that parents hate (and thus avoid) paying fines when they arrive late to pick up a child from daycare, right? Wrong. Parents, unlike superstar athletes, don't seem to mind the late fee at all as the number parents arriving late actually increased after the implementation of a fine.
The deterrence hypothesis predicts that the introduction of a penalty that leaves everything else unchanged will reduce the occurrence of the behavior subject to the fine. We present the result of a field study in a group of day‐care centers that contradicts this prediction. Parents used to arrive late to collect their children, forcing a teacher to stay after closing time. We introduced a monetary fine for late‐coming parents. As a result, the number of late‐coming parents increased significantly. After the fine was removed no reduction occurred. We argue that penalties are usually introduced into an incomplete contract, social or private. They may change the information that agents have, and therefore the effect on behavior may be opposite of that expected. If this is true, the deterrence hypothesis loses its predictive strength, since the clause “everything else is left unchanged” might be hard to satisfy.
Source: A Fine is a Price. The Journal of Legal Studies, vol. 29 (January 2000)