Local Control: An Educational Model of Private Enforcement of Public Rules

We study a society of agents where individual incentives conflict with collective ones and thus individual utility maximization leads to inefficient outcomes. We assume that there is no functioning central institution which can control individual behavior. Instead, we analyze a system of what we call local control (LC), where the enforcement of punishment lies in the hands of individuals in the society rather than in the hand of a central institution. The mechanism that governs the spread of control is the educational impact on an agent being controlled by some other agent, where we distinguish between executed and threatened punishment. Agents maximize their payoffs and underlie a constant drift towards not controlling others anymore. Our main results show that LC can survive if the educational impact of control is strong enough relative to the drift. If the educational impact of control is too weak LC breaks down. Moreover, there exists a non{monotonic punishment effect that sets a trap for standard legal policy advices.cooperation;prisoner's dilemma;social control;punishment;institutional change

A Myopic Adjustment Process Leading to Best-Reply Matching

stochastic adjustment process;best reply;mathcing;regret equilibrium

Local Control:An Educational Model of Private Enforcement of Public Rules

We study a society of agents where individual incentives conflict with collective ones and thus individual utility maximization leads to inefficient outcomes. We assume that there is no functioning central institution which can control individual behavior. Instead, we analyze a system of what we call local control (LC), where the enforcement of punishment lies in the hands of individuals in the society rather than in the hand of a central institution. The mechanism that governs the spread of control is the educational impact on an agent being controlled by some other agent, where we distinguish between executed and threatened punishment. Agents maximize their payoffs and underlie a constant drift towards not controlling others anymore. Our main results show that LC can survive if the educational impact of control is strong enough relative to the drift. If the educational impact of control is too weak LC breaks down. Moreover, there exists a non{monotonic punishment effect that sets a trap for standard legal policy advices.

Regret Equilibria in Games

We study boundedly rational players in an interactive situation. Each player follows a simple choice procedure in which he reacts optimally against a combination of actions of his opponents drawn at random from the distribution generated by a player's beliefs. By imposing a consistency requirement we obtain an equilibrium notion which we call regret equilibrium. An existence proof is provided and it is shown that the concept survives the iterated elimination of never-best responses. Additional properties are studied and the regret equilibrium concept is compared with other game theoretic solution concepts. The regret equilibrium concept is illustrated by means of interesting examples. It is shown that in the centipede game, players will continue to play with large probability.

Knowing that you matter, matters! The Interplay of Meaning, Monetary Incentives, and Worker Recognition

__Abstract__ We manipulate workers' perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect of monetary incentives and of worker recognition via symbolic awards. We also look at interaction effects. While meaning outperforms monetary incentives, the latter have a robust positive effect on performance that is independent of meaning. In contrast, meaning and recognition have largely similar effects but interact negatively. Our results are in line with image-reward theory (Benabou and Tirole 2006) and suggest that meaning and worker recognition operate via the same channel, namely image seeking