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Tolerance of noncompliance: Discretion rather than simple rules?

Author

Listed:
  • Álvaro Forteza
  • Cecilia Noboa

Abstract

We argue that societies sometimes choose not to enforce the law to gain “flexibility”. Especially developing countries face a dilemma between discretion and commitment to only partially-contingent rules. Rules are good for incentives, but discretion may be more “flexible”. We embed this dilemma in a political model and show that citizens will not support strong enforcement institutions unless the state is able to commit to sufficiently sophisticated redistributive policies.

Suggested Citation

  • Álvaro Forteza & Cecilia Noboa, 2019. "Tolerance of noncompliance: Discretion rather than simple rules?," Estudios de Economia, University of Chile, Department of Economics, vol. 46(1), pages 31-59, June.
    • Handle: RePEc:udc:esteco:v:46:y:2019:i:1:p:31-59
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    File URL: https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/52634/55228
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    More about this item

    Keywords

    Discretion; commitment; simple rules; informality; enforcement;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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