Self-Regulation and Governmental Oversight: A Theoretical and Experimental Study

38 Pages Posted: 8 Dec 2020

See all articles by Silvester Van Koten

Silvester Van Koten

Jan Evangelista Purkyně University, FSE

Date Written: November 20, 2020

Abstract

A self-regulatory organization (SRO) is a non-governmental organization owned and operated by its members, with the power to create and enforce industry regulations and standards for its members. A key question is whether oversight by an SRO can replace governmental oversight, or whether supplementary governmental oversight is necessary. Using a formal model for the financial sector, and solving simultaneous games, I show that a lack of commitment by the SRO may necessitate governmental oversight of both SRO members and the SRO itself. The core of the model is supported by economics experiments.

Keywords: Self-regulatory organizations, meta-regulation, governmental oversight, simultaneous versus sequential games, economics experiments

JEL Classification: C72, G18, G28, K20, L44

Suggested Citation

Van Koten, Silvester, Self-Regulation and Governmental Oversight: A Theoretical and Experimental Study (November 20, 2020). Available at SSRN: https://ssrn.com/abstract=3734310 or http://dx.doi.org/10.2139/ssrn.3734310

Silvester Van Koten (Contact Author)

Jan Evangelista Purkyně University, FSE ( email )

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Ústí nad Labem, 400 96
Czech Republic

HOME PAGE: http://www.ujep.cz

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