Achim, Peter and Knoepfle, Jan (2024) Relational Enforcement. Theoretical Economics. 823-863. ISSN 1555-7561
Abstract
A principal incentivizes an agent to maintain compliance and to truthfully announce any breaches of compliance. Compliance is imperfectly controlled by the agent’s private effort choices, is partially persistent, and is verifiable by the principal only through costly inspections. We show that in principal-optimal equilibria, the principal enforces maximum compliance using deterministic inspections. Periodic inspection cycles are suspended during periods of self-reported noncompliance, during which the agent is fined. We show how commitment to random inspections would benefit the principal, and discuss possible ways for the principal to overcome her commitment problem.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2024 The Authors |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) |
Depositing User: | Pure (York) |
Date Deposited: | 26 Mar 2025 12:11 |
Last Modified: | 26 Mar 2025 12:11 |
Published Version: | https://doi.org/10.3982/TE5183 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.3982/TE5183 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:224880 |