Black Sheep or Scapegoats? Implementable Monitoring Policies Under Unobservable Levels of Misbehavior

9 Pages Posted: 16 Apr 2014

See all articles by Berno Buechel

Berno Buechel

Bielefeld University - Center for Mathematical Economics

Gerd Muehlheusser

University of Hamburg; IZA Institute of Labor Economics

Date Written: March 15, 2014

Abstract

An authority delegates a monitoring task to an agent. It can only observe the number of detected offenders, but neither the monitoring intensity chosen by the agent nor the resulting level of misbehavior. We provide a necessary and sufficient condition for the implementability of monitoring policies. Typically, several monitoring intensities give rise to the same number of detected offenses, and only the minimum of these can be implemented. In equilibrium, a large fraction of potential offenders cannot be deterred.

Keywords: monitoring, deterrence, unobservable misbehavior, victimless crime, doping, law & economics

JEL Classification: K42, D73

Suggested Citation

Buechel, Berno and Muehlheusser, Gerd, Black Sheep or Scapegoats? Implementable Monitoring Policies Under Unobservable Levels of Misbehavior (March 15, 2014). CESifo Working Paper Series No. 4698. Available at SSRN: https://ssrn.com/abstract=2425105

Berno Buechel (Contact Author)

Bielefeld University - Center for Mathematical Economics ( email )

Postfach 10 01 31
Bielefeld, D-33501
Germany

Gerd Muehlheusser

University of Hamburg ( email )

Von Melle Park 5
Hamburg, 20146
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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