Working Paper: NBER ID: w21457
Authors: Daron Acemoglu; Alexander Wolitzky
Abstract: We introduce the possibility of direct punishment by specialized enforcers into a model of community enforcement. Specialized enforcers need to be given incentives to carry out costly punishments. Our main result shows that, when the specialized enforcement technology is sufficiently effective, cooperation is best sustained by a “single 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 agent is that such actions, 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 ineffective, optimal equilibria do punish deviations by regular agents with community enforcement. The model thus predicts that societies with more advanced enforcement technologies should rely on specialized enforcement, while less technologically advanced societies should rely on community enforcement. Our results hold both under perfect monitoring of actions and under various types of private monitoring.
Keywords: Cooperation; Enforcement; Public Goods; Game Theory
JEL Codes: C73; D72; D74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| effective specialized enforcement (K40) | higher cooperation levels (C71) |
| deviation by enforcers (K42) | reduced societal cooperation (D70) |
| ineffective specialized enforcement (H76) | optimal equilibria resort to community enforcement (D00) |
| perfect monitoring (C52) | maximum level of cooperation through single enforcer punishment strategies (C72) |
| private monitoring (Y50) | single enforcer punishment strategies outperform contagion strategies (C92) |