A comparison of simple action-based and outcome-based policies for emergency-like situations

Tim Friehe and Avraham Tabbach

Mathematical Social Sciences, 2018, vol. 92, issue C, 22-34

Abstract: This paper explores a class of social dilemmas in which the participation of a given number of individuals is required to achieve a social end in the absence of a coordinating authority (e.g., rescuing a person in peril or preventing an imminent crime). After describing the first- and second-best outcomes, we examine whether simple policy instruments such as punishments and rewards can induce the second-best outcome, distinguishing between policies based on an individual’s actions (i.e., action-based policies) and policies based on the outcome (i.e., outcome-based policies). For the domain of simple policies considered, we establish that action-based policies enjoy a crucial advantage over outcome-based ones: namely, outcome-based policies always feature an equilibrium with no participation, whereas action-based policies exclude this equilibrium.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:92:y:2018:i:c:p:22-34

DOI: 10.1016/j.mathsocsci.2017.09.002

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