scholarly journals Sustaining Cooperation: Community Enforcement versus Specialized Enforcement

2019 ◽  
Vol 18 (2) ◽  
pp. 1078-1122 ◽  
Author(s):  
Daron Acemoglu ◽  
Alexander Wolitzky
Keyword(s):  
Private Monitoring ◽  
Perfect Monitoring

Abstract We introduce the possibility of coercive punishment by specialized enforcers into a model of community enforcement. We assume that, just as regular agents need to be given incentives to cooperate with each other, specialized enforcers need to be given incentives to carry out costly punishments. We fully characterize optimal equilibria in the model. When the specialized enforcement technology is sufficiently effective, cooperation is best sustained by a “one-time enforcer punishment equilibrium”, where any deviation by a regular agent is punished only once, and only by enforcers. In contrast, enforcers themselves are disciplined (at least in part) by community enforcement. The reason why there is no community enforcement following deviations by regular agents is that such a response, by reducing future cooperation, would decrease the amount of punishment that enforcers are willing to impose on deviators. Conversely, when the specialized enforcement technology is less effective, optimal equilibria involve a mix of specialized enforcement and community enforcement (which might take the form of “ostracism”). Our results hold both under perfect monitoring of actions and under various types of private monitoring.

scholarly journals The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

2019 ◽  
Vol 11 (1) ◽  
pp. 1-43 ◽  
Author(s):  
Masaki Aoyagi ◽  
V. Bhaskar ◽  
Guillaume R. Fréchette
Keyword(s):  
Laboratory Experiment ◽  
Repeated Games ◽  
Imperfect Monitoring ◽  
Public And Private ◽  
Private Monitoring ◽  
Stage Game ◽  
The Impact ◽  
Public Monitoring ◽  
Perfect Monitoring ◽  
Infinitely Repeated Games

This paper uses a laboratory experiment to study the effect of the monitoring structure on the play of the infinitely repeated prisoner’s dilemma. Keeping the strategic form of the stage game fixed, we examine the behavior of subjects when information about past actions is perfect (perfect monitoring), noisy but public (public monitoring), and noisy and private (private monitoring). We find that the subjects sustain cooperation in every treatment, but that their strategies differ across the three treatments. Specifically, the strategies under imperfect monitoring are both more complex and more lenient than those under perfect monitoring. The results show how the changes in strategies across monitoring structures mitigate the effect of noise in monitoring on efficiency. (JEL C72, C73, C92, D82, D83)

Informational Smallness and Private Monitoring in Repeated Games, Second Version

2011 ◽  
Author(s):  
Richard P. McLean ◽  
Ichiro Obara ◽  
Andrew Postlewaite
Keyword(s):  
Repeated Games ◽  
Private Monitoring

How Effective Is Joint Public and Private Monitoring? The Case of the AICPA Auditor Change Notification Letter

2001 ◽  
Vol 20 (1) ◽  
pp. 29-43 ◽  
Author(s):  
Michael L. Ettredge ◽  
David B. Smith ◽  
Mary S. Stone
Keyword(s):  
Public Organization ◽  
Public And Private ◽  
Private Monitoring ◽  
Educational Effort ◽  
Private Organization ◽  
Auditor Change ◽  
Client Behavior ◽  
Change Notification ◽  
Disclosure Requirement

The AICPA SEC Practice Section (SECPS) notification rule requires a member firm to notify its former client and the Chief Accountant of the SEC in writing within five business days of the date it determines the client-auditor relationship has ended. The rule is unique because it was developed and is enforced by a private organization (the AICPA) to assist a public organization (the SEC) in fulfilling its charge of ensuring full and timely disclosure. An SECPS educational effort to make members aware of their notification responsibilities recently ended. Our paper evaluates the effectiveness of the SECPS educational effort and the SECPS notification letter. It shows that registrant as well as auditor compliance and timeliness increased during the time the notification rule has been in effect, and that the improved registrant performance is likely due in part to improved auditor performance. One implication of our study is that a disclosure requirement auditors impose upon themselves can be effective in helping the SEC monitor client behavior.

scholarly journals Estimating Dynamic Games of Electoral Competition to Evaluate Term Limits in US Gubernatorial Elections

2017 ◽  
Vol 107 (7) ◽  
pp. 1824-1857 ◽  
Author(s):  
Holger Sieg ◽  
Chamna Yoon
Keyword(s):  
Political Economy ◽  
Empirical Analysis ◽  
Dynamic Games ◽  
Electoral Competition ◽  
Term Limits ◽  
Relative Importance ◽  
Political Candidates ◽  
Trade Off ◽  
Perfect Monitoring ◽  
The Empirical Analysis

This paper shows how to identify and estimate, using standard semi-parametric techniques, a class of dynamic games with perfect monitoring, that have been at the frontier of recent research in political economy. The empirical analysis provides novel quantitative insights into the trade-off that voters face between ideology and ability, the differences in ability and ideology among parties and states, and the differences in preferences between political candidates and voters. We analyze the consequences of term limits and quantify their relative importance. Specifically, we characterize conditions under which term limits improve voters' welfare. (JEL C57, C73, D72)

Recall and private monitoring

2015 ◽  
Vol 90 ◽  
pp. 162-170
Author(s):  
Christopher Phelan ◽  
Andrzej Skrzypacz
Keyword(s):  
Private Monitoring
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