WHEN AND HOW THE PUNISHMENT MUST FIT THE CRIME

George Mailath, Volker Nocke and Lucy White

International Economic Review, 2017, vol. 58, issue 2, 315-330

Abstract: In repeated normal‐form (simultaneous‐move) games, simple penal codes (Abreu, Journal of Economic Theory 39(1) (1986), 191–225; and Econometrica 56(2) (1988), 383–96) permit an elegant characterization of the set of subgame‐perfect outcomes. We show that in repeated extensive‐form games such a characterization no longer obtains. By means of examples, we identify two types of settings in which a subgame‐perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator but also to the nature of the deviation.

Date: 2017
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https://doi.org/10.1111/iere.12219

Related works:
Working Paper: When and How the Punishment Must Fit the Crime (2015)
Working Paper: When and How the Punishment Must Fit the Crime (2015)
Working Paper: When and how the punishment must fit the crime (2015)
Working Paper: When and How the Punishment Must Fit the Crime (2015)
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