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Local control : an educational model of private enforcement of public rules

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Author Info
Huck, S.
Kosfeld, M. (Tilburg University, Center for Economic Research)

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Abstract

We study a society of agents where individual incentives conflict with collective ones and thus individual utility maximization leads to inefficient outcomes. We assume that there is no functioning central institution which can control individual behavior. Instead, we analyze a system of what we call local control (LC), where the enforcement of punishment lies in the hands of individuals in the society rather than in the hand of a central institution. The mechanism that governs the spread of control is the educational impact on an agent being controlled by some other agent, where we distinguish between executed and threatened punishment. Agents maximize their payoffs and underlie a constant drift towards not controlling others anymore. Our main results show that LC can survive if the educational impact of control is strong enough relative to the drift. If the educational impact of control is too weak LC breaks down. Moreover, there exists a non-monotonic punishment effect that sets a trap for standard legal policy advices.

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Publisher Info
Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 126.

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Date of creation: 1998
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Handle: RePEc:dgr:kubcen:1998126

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Related research
Keywords: punishment;

Find related papers by JEL classification:
K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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  1. Sethi, Rajiv & Somanathan, E, 1996. "The Evolution of Social Norms in Common Property Resource Use," American Economic Review, American Economic Association, vol. 86(4), pages 766-88, September. [Downloadable!] (restricted)
  2. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August. [Downloadable!] (restricted)
  3. McMillan, John, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-62, Summer. [Downloadable!] (restricted)
  4. repec:att:wimass:199612r is not listed on IDEAS
  5. Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-19, June. [Downloadable!] (restricted)
  6. Hay, Jonathan R & Shleifer, Andrei, 1998. "Private Enforcement of Public Laws: A Theory of Legal Reform," American Economic Review, American Economic Association, vol. 88(2), pages 398-403, May. [Downloadable!] (restricted)
  7. Eshel, Ilan & Samuelson, Larry & Shaked, Avner, 1998. "Altruists, Egoists, and Hooligans in a Local Interaction Model," American Economic Review, American Economic Association, vol. 88(1), pages 157-79, March. [Downloadable!] (restricted)
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