How Jeremy Bentham would defend against coordinated attacks

Ole Jann and Christoph Schottmüller
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Christoph Schottmüller: Department of Economics, University of Copenhagen

No 15-11, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: How can a single player defend against the threat of a coordinated attack by a group? For example, how can a central bank defend a currency peg against speculators, a government against a revolution or a prison warden against a breakout? Bentham (1787) proposed an innovative prison concept based on information asymmetries - "the panopticon" - as an answer to this question. We consider di erent information structures in a stylized model of a prison, in which a warden chooses a costly guard level with the goal of avoiding breakouts. Successful breakouts require coordination among prisoners. We show that the information structure corresponding to the panopticon often performs best, especially if there are many prisoners.

Keywords: panopticon; coordination games; global games; transparency (search for similar items in EconPapers)
JEL-codes: D23 D74 D82 E58 F31 Z13 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-08-12
New Economics Papers: this item is included in nep-mac and nep-mic
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