Rewarding Policemen Increases Crime. Another Surprising Result from the Inspection Game

Luciano Andreozzi

Public Choice, 2004, vol. 121, issue 1, 69-82

Abstract: Inspection games are 2x2 games in which one playermust decide whether to inspect the other player, who in turnmust decide whether to infringe a norm or a regulation.Inspection games have a single, mixed strategy Nashequilibrium, which has counter-intuitive comparative staticsproperties. This result has been used by Tsebelis (1989) andHoller (1992) to show that the economic approach to lawenforcement is not likely to generate clear-cut predictions.In this paper I discuss a variant of the inspection game inwhich the inspector can act as a Stackelberg leader. I willalso show that this version of the inspection game hascounter-intuitive comparative statics properties. Inparticular, increasing inspector’s incentives to enforce thelaw increases the frequency of law infractions. Copyright Kluwer Academic Publishers 2004

Date: 2004
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DOI: 10.1007/s11127-004-6166-x

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