Becker, G. and G. Stigler (1974), Law Enforcement, Malfeasance, and the Compensation of Enforcers

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Return to BPP Field Exam Papers 2012

Compensation of Enforcers

B&S propose two methods:

  1. Paying higher wages and monitoring performance to make honest behavior attractive enough.
  2. Making enforcers 'partners' of Victims in claiming compensation

Focus on method 1 -- Solve using backward induction. See paper for solution for [math]W_{1}^{*}[/math] and [math]W_{2}^{*}[/math]

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