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Sustaining Cooperation: Community Enforcement versus Specialized Enforcement

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  • Daron Acemoglu
  • Alexander Wolitzky

Abstract

We introduce the possibility of coercive punishment by specialized enforcers into a model of community enforcement. We assume that, just as regular agents need to be given incentives to cooperate with each other, specialized enforcers need to be given incentives to carry out costly punishments. We fully characterize optimal equilibria in the model. When the specialized enforcement technology is sufficiently effective, cooperation is best sustained by a “one-time enforcer punishment equilibrium”, where any deviation by a regular agent is punished only once, and only by enforcers. In contrast, enforcers themselves are disciplined (at least in part) by community enforcement. The reason why there is no community enforcement following deviations by regular agents is that such a response, by reducing future cooperation, would decrease the amount of punishment that enforcers are willing to impose on deviators. Conversely, when the specialized enforcement technology is less effective, optimal equilibria involve a mix of specialized enforcement and community enforcement (which might take the form of “ostracism”). Our results hold both under perfect monitoring of actions and under various types of private monitoring.

Suggested Citation

  • Daron Acemoglu & Alexander Wolitzky, 2020. "Sustaining Cooperation: Community Enforcement versus Specialized Enforcement," Journal of the European Economic Association, European Economic Association, vol. 18(2), pages 1078-1122.
    • Handle: RePEc:oup:jeurec:v:18:y:2020:i:2:p:1078-1122.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvz008
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    Cited by:

    1. Cigno, Alessandro, 2021. "Rules, Preferences and Evolution from the Family Angle," IZA Discussion Papers 14621, Institute of Labor Economics (IZA).
    2. Anderlini, L. & Felli, L. & Piccone, M., 2022. "The Emergence of Enforcement," Cambridge Working Papers in Economics 2250, Faculty of Economics, University of Cambridge.
    3. S. Nageeb Ali & David A. Miller, 2020. "Communication and Cooperation in Markets," Papers 2005.09839, arXiv.org.
    4. Kenju Kamei & Smriti Sharma & Matthew J. Walker, 2023. "Collective Sanction Enforcement: New Experimental Evidence from Two Societies," Keio-IES Discussion Paper Series 2023-014, Institute for Economics Studies, Keio University.
    5. Craig A. Depken & Peter A. Groothuis & Mark C. Strazicich, 2020. "Evolution Of Community Deterrence: Evidence From The National Hockey League," Contemporary Economic Policy, Western Economic Association International, vol. 38(2), pages 289-303, April.
    6. Oguzhan Celebi, 2023. "Substitutability in Favor Exchange," Papers 2309.10749, arXiv.org.
    7. Wei Wang, 2021. "Observational equivalence of balanced growth with external habit formation," Australian Economic Papers, Wiley Blackwell, vol. 60(3), pages 424-434, September.
    8. Liu, Ce, 2023. "Stability in repeated matching markets," Theoretical Economics, Econometric Society, vol. 18(4), November.
    9. Daniela Del Boca & Chiara Daniela Pronzato & Lucia Schiavon, 2021. "How parenting courses affect time-use of the family?," CHILD Working Papers Series 93 JEL Classification: J1, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.

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