A decree that the public can (not) withstand

שלחו לחבר
Artyom Jelnov
09/03/2021 - 12:50 - 11:30
חדר סגל כלכלה בנין 504 / זום
Ariel University


Joint with: Doron Klunover

Abstract: We consider a model in which an agent chooses an activity level after a regulator decides above what level of activity he needs to pay a fixed fine. If the agent passes this level, then he pays the fine. The activity is harmful for society. The agent has private information about the utility he gains from the activity, which is known to be increasing but for a given level, can be either low or high. We show that, under some conditions, to minimize harm the regulator should adopt a random punishment scheme. Our model may help in solving the puzzle of why vague enforcement policies are implemented by good governments even when tough enforcement is possible and costless