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On Modes of Economic Governance
Avinash Dixit Princeton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) October 2001 CESifo Working Paper Series No. 589 Abstract: I consider transactions involving asymmetric prisoners' dilemmas between pairs of players selected from two large populations. Games are played repeatedly, but information about cheating is not adequate to sustain cooperation, and there is no official legal system of contract enforcement. I examine how profit-maximizing private intermediation can supply the information and enforcement. I obtain conditions under which private governance can improve upon no governance, and examine why it fails to achieve social optimality.
JEL Classifications: H10, K12 Working Paper SeriesDate posted: November 13, 2001 ; Last revised: September 01, 2004Suggested CitationContact Information
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