Abstract:Allard van der Made I explain the ubiquitous use of graduated punishments by studying a repeated public good game in which a social planner imperfectly monitors agents to detect shirkers. Agents' cost of contributing is private information and administering punishments is costly. Using graduated punishments can be optimal for two reasons. It increases the price of future wrongdoing (temporal spillover effect) and it can lead to bad types revealing themselves (screening effect). The temporal spillover effect is… Show more
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