Errors of I and II Types in Economic Exchanges with Third Party Enforcement

Andrey Shastitko

Journal of the New Economic Association, 2011, issue 10, 125-148

Abstract: Coordination and distribution effects in economic exchanges with third party enforcement due to errors of I and II types are at the center of the article. Based on idea of opportunity for equilibrium Pareto-improvement in one shot prisoners’ dilemma game by third-party enforcer it has been shown not only constraints on cost of enforcement services but consequences of errors of I and II types both non-discriminatory and discriminatory cases. Discrimination by third party is analyzed not only from the players direct payment for services perspective but from fines, compensations and errors probabilities too. Errors of I and II types in rules enforcement are analyzed in relation to analogous errors in rules design with some implication for antimonopoly issues.

Keywords: errors of I and II types; rules enforcement; prisoners’ dilemma; coordination and distributive aspects of institutions (search for similar items in EconPapers)
JEL-codes: D60 H40 K21 K42 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2011:i:10:p:125-148

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