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Errors of I and II Types in Economic Exchanges with Third Party Enforcement

  • Shastitko, A.

    (Bureau of Economic Analysis Foundation (BEA), Moscow, Russia)

Coordination and distribution effects in economic exchanges with third party enforcement due to errors of I and II types are at the center of the article. Based on idea of opportunity for equilibrium Pareto-improvement in one shot prisoners’ dilemma game by third-party enforcer it has been shown not only constraints on cost of enforcement services but consequences of errors of I and II types both non-discriminatory and discriminatory cases. Discrimination by third party is analyzed not only from the players direct payment for services perspective but from fines, compensations and errors probabilities too. Errors of I and II types in rules enforcement are analyzed in relation to analogous errors in rules design with some implication for antimonopoly issues.

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Article provided by New Economic Association in its journal Journal of the New Economic Association.

Volume (Year): (2011)
Issue (Month): 10 ()
Pages: 125-148

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Handle: RePEc:nea:journl:y:2011:i:10:p:125-148
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