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How Jeremy Bentham would defend against coordinated attacks

Author

Listed:
  • Ole Jann

    (Department of Economics, University of Copenhagen)

  • Christoph Schottmüller

    (Department of Economics, University of Copenhagen)

Abstract

How can a single player defend against the threat of a coordinated attack by a group? For example, how can a central bank defend a currency peg against speculators, a government against a revolution or a prison warden against a breakout? Bentham (1787) proposed an innovative prison concept based on information asymmetries - "the panopticon" - as an answer to this question. We consider di erent information structures in a stylized model of a prison, in which a warden chooses a costly guard level with the goal of avoiding breakouts. Successful breakouts require coordination among prisoners. We show that the information structure corresponding to the panopticon often performs best, especially if there are many prisoners.

Suggested Citation

  • Ole Jann & Christoph Schottmüller, 2015. "How Jeremy Bentham would defend against coordinated attacks," Discussion Papers 15-11, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:1511
    as

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    File URL: http://www.econ.ku.dk/english/research/publications/wp/dp_2015/1511.pdf
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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