The option value of record-based sanctions

• 成果类型: Article
• 署名作者: Leshem, Shmuel; Tabbach, Avraham
• 署名单位: Tel Aviv University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2022.10.014
• 发表日期: 2023
• 页码: 1-22
• 关键词: Graduated sanctions; option value

摘要

This paper offers an option value-based rationale for the consideration of non-compliance record in punishment. We study compliance decisions of a population of individuals who live for two periods, where each individual's non-compliance benefits are random and independent over time. Because non-uniform sanction schemes produce different option values to current-period compliance and non-compliance, an optimal sanction scheme trades off present and future compliance and depends on the overall sanction and the distribution of non-compliance benefits. Escalating sanctions maximize compliance for a small overall sanction and a large mass of high non-compliance benefits.(c) 2022 Elsevier Inc. All rights reserved.