Commitment versus Flexibility in Enforcement Games

Multijurisdictional Enforcement Games

“…Following Graetz et al (1986), compliance with tax law is often modeled in this way. Otherwise, few economic analyses of law enforcement, with the notable exception of Leshem and Tabbach (2012), have deviated from the conventional assumption that enforcement agencies are first movers (see also Spengler 2014and Tsebelis 1989, 1990).…”

“…If enforcement takes place only after misconduct has occurred and involves no implicit commitment to make similar enforcement decisions in subsequent cases, then, virtually by definition, enforcement ought to have no deterrent effect. Potential wrongdoers might be deterred because they believe that the agency will enforce because it seeks to achieve objectives such as retribution or compensation or incapacitation, but the deterrent effects will be quite different from those suggested by conventional models (Leshem and Tabbach 2012). Alternatively, potential wrongdoers might be deterred if this sort of enforcement game is played repeatedly; they might believe that the agency will engage in enforcement after-the-fact in order to build or maintain a reputation that will deter in future periods.…”

“…A third implication of presuming that enforcement decisions follow misconduct is that enforcement decisions can be conditioned on information that becomes available after the misconduct has occurred (Graetz et al 1986, Leshem andTabbach 2012), including information about the prevalence of misconduct, social harm or enforcement costs. For instance, instead of selecting firms at random to be investigated for foreign bribery, an agency might focus on firms that local press accounts have connected to documented instances of public sector corruption, especially when there are allegations that the corrupt acts have caused considerable harm to the public, involve multiple firms in an industry, or will be the subject of a local investigation.…”

Focusing law enforcement when offenders can choose location

“…Some contributions take credibility explicitly into account (Baker and Miceli, 2005). In other contributions, the possibility of enforcement agents and potential offenders moving simultaneously is considered (Friehe, 2008;Leshem and Tabbach, 2012). 7 The alternative assumption is considered in Ferrer (2010), for example, and would introduce additional complications such as the possibility of multiple equilibria.…”

Macro Meets Micro: Stochastic (Calvo) Revisions in Games

“…Third, the timing can be endogenized. Libich and Stehlík (2011) do so in a different timing framework, for an alternative avenue, see Leshem and Tabbach (2012). Fourth, we do not examine a repeated version of this game, since the effects of repetition in improving coordination are widely known.…”