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Rewarding Policemen Increases Crime. Another Surprising Result from the Inspection Game

  • Luciano Andreozzi

    ()

Inspection games are 2x2 games in which one playermust decide whether to inspect the other player, who in turnmust decide whether to infringe a norm or a regulation.Inspection games have a single, mixed strategy Nashequilibrium, which has counter-intuitive comparative staticsproperties. This result has been used by Tsebelis (1989) andHoller (1992) to show that the economic approach to lawenforcement is not likely to generate clear-cut predictions.In this paper I discuss a variant of the inspection game inwhich the inspector can act as a Stackelberg leader. I willalso show that this version of the inspection game hascounter-intuitive comparative statics properties. Inparticular, increasing inspector’s incentives to enforce thelaw increases the frequency of law infractions. Copyright Kluwer Academic Publishers 2004

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File URL: http://hdl.handle.net/10.1007/s11127-004-6166-x
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Article provided by Springer in its journal Public Choice.

Volume (Year): 121 (2004)
Issue (Month): 1 (October)
Pages: 69-82

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Handle: RePEc:kap:pubcho:v:121:y:2004:i:1:p:69-82
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  1. Fudenberg, Drew & Levine, David K, 1992. "Maintaining a Reputation When Strategies Are Imperfectly Observed," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 561-79, July.
  2. A. Mitchell Polinsky & Steven Shavell, 1999. "The Economic Theory of Public Enforcement of Law," NBER Working Papers 6993, National Bureau of Economic Research, Inc.
  3. Cheng Leonard K. & Zhu Min, 1995. "Mixed-Strategy Nash Equilibrium Based upon Expected Utility and Quadratic Utility," Games and Economic Behavior, Elsevier, vol. 9(2), pages 139-150, May.
  4. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  5. Drew Fudenberg & David Levine, 1987. "Reputation and Equilibrium Selection in Games With a Patient Player," Working papers 461, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 267-95, September.
  7. Cox, Gary W, 1994. " A Note on Crime and Punishment," Public Choice, Springer, vol. 78(1), pages 115-24, January.
  8. Wittman, Donald, 1985. "Counter-intuitive results in game theory," European Journal of Political Economy, Elsevier, vol. 1(1), pages 77-89.
  9. Wittman, Donald, 1993. "Nash equilibrium vs. maximin : A comparative game statics analysis," European Journal of Political Economy, Elsevier, vol. 9(4), pages 559-565, November.
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