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This paper shows that the informativeness principle does not automatically extend to settings with limited liability. Even if a signal is informative about effort, it may have no value for contracting. An agent with limited liability is paid zero for certain output realizations. Thus, even if...
Persistent link: https://www.econbiz.de/10013047777
This article surveys the theory of the public enforcement of law -- the use of public agents (inspectors, tax auditors …, police, prosecutors) to detect and to sanction violators of legal rules. We first present the basic elements of the theory … examine a variety of extensions of the central theory, concerning accidental harms, costs of imposing fines, errors, general …
Persistent link: https://www.econbiz.de/10013216494
Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they … differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm … use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation …
Persistent link: https://www.econbiz.de/10013100136
Previous findings on punishment have focused on environments in which the outcomes are known with certainty. In this … paper, we conduct experiments to investigate how punishment affects cooperation in a two-person stochastic prisoner … specified probabilistically under a transparent information condition. In particular, we study two types of punishment …
Persistent link: https://www.econbiz.de/10013224395
The 1998 Master Settlement Agreement resolved the unprecedented litigation in which the states sought to recoup the cigarette-related Medicaid costs. The litigation was settled through a combination of negotiated regulatory requirements and financial payments of about $250 billion over 25 years....
Persistent link: https://www.econbiz.de/10013116702
puzzle in standard economic models. To study this phenomenon, we propose a positive theory of IEAs in which the political … (might not be implemented in full). The theory also provides a new perspective for understanding investments in green …
Persistent link: https://www.econbiz.de/10012976975
vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the "hired gun" mechanism …
Persistent link: https://www.econbiz.de/10013125564
Cities generate negative, as well as positive, externalities; addressing those externalities requires both infrastructure and institutions. Providing clean water and removing refuse requires water and sewer pipes, but the urban poor are often unwilling to pay for the costs of that piping....
Persistent link: https://www.econbiz.de/10013000522
observation that cartels keep participants in line through the threat of punishment, but they fail to explain two important … it is detected. We propose a theory of "equilibrium price cutting and business stealing" in cartels to bridge this gap … between theory and observation …
Persistent link: https://www.econbiz.de/10013056583
We introduce the possibility of direct punishment by specialized enforcers into a model of community enforcement … specialized enforcement technology is sufficiently effective, cooperation is best sustained by a “single enforcer punishment … punishment that enforcers are willing to impose on deviators. Conversely, when the specialized enforcement technology is …
Persistent link: https://www.econbiz.de/10013017498