IDEAS home Printed from https://ideas.repec.org/a/sae/ratsoc/v30y2018i3p377-390.html
   My bibliography  Save this article

On the cooperative and competitive aspects of strategic monitoring

Author

Listed:
  • Daniel G. Arce

    (The University of Texas at Dallas, USA)

Abstract

Strategic monitoring occurs in myriad situations such as principal–agent relationships, law enforcement and treaty verification. Such situations are generally known as enforcement or inspection games, with the focus largely being on the (counterintuitive) properties of their associated mixed strategy Nash equilibrium. This article instead characterizes the cooperative resolution of the mixed motives of the players involved. It does so through an illustrative decomposition of the enforcement/inspection game into its cooperative and competitive constituent parts. The results are interpreted within an efficiency wage context and the distribution of the saved monitoring costs that cooperation engenders.

Suggested Citation

  • Daniel G. Arce, 2018. "On the cooperative and competitive aspects of strategic monitoring," Rationality and Society, , vol. 30(3), pages 377-390, August.
    • Handle: RePEc:sae:ratsoc:v:30:y:2018:i:3:p:377-390
    DOI: 10.1177/1043463118774785
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1043463118774785
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1043463118774785?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    2. Wittman, Donald, 1985. "Counter-intuitive results in game theory," European Journal of Political Economy, Elsevier, vol. 1(1), pages 77-89.
    3. Heiko Rauhut, 2015. "Stronger inspection incentives, less crime? Further experimental evidence on inspection games," Rationality and Society, , vol. 27(4), pages 414-454, November.
    4. Luciano Andreozzi, 2004. "Rewarding Policemen Increases Crime. Another Surprising Result from the Inspection Game," Public Choice, Springer, vol. 121(1), pages 69-82, October.
    5. Jean Rabanal & Daniel Friedman, 2014. "Incomplete Information, Dynamic Stability and the Evolution of Preferences: Two Examples," Dynamic Games and Applications, Springer, vol. 4(4), pages 448-467, December.
    6. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    7. Uwe Jirjahn, 2006. "A Note on Efficiency Wage Theory and Principal–Agent Theory," Bulletin of Economic Research, Wiley Blackwell, vol. 58(3), pages 235-252, July.
    8. Holler, Manfred J, 1993. "Fighting Pollution When Decisions Are Strategic," Public Choice, Springer, vol. 76(4), pages 347-356, August.
    9. George Tsebelis, 1990. "Penalty has no Impact on Crime:," Rationality and Society, , vol. 2(3), pages 255-286, July.
    10. Adam Kalai & Ehud Kalai, 2013. "Cooperation in Strategic Games Revisited," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(2), pages 917-966.
    11. Daniel G. Arce, 2007. "Is Agency Theory Self‐Activating?," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 708-720, October.
    12. Wittman, Donald, 1993. "Nash equilibrium vs. maximin : A comparative game statics analysis," European Journal of Political Economy, Elsevier, vol. 9(4), pages 559-565, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gianfranco Gambarelli & Daniele Gervasio & Francesca Maggioni & Daniel Faccini, 2022. "A Stackelberg game for the Italian tax evasion problem," Computational Management Science, Springer, vol. 19(2), pages 295-307, June.
    2. Arce, Daniel G., 2010. "Corporate virtue: Treatment of whistle blowers and the punishment of violators," European Journal of Political Economy, Elsevier, vol. 26(3), pages 363-371, September.
    3. Shiran Rachmilevitch, 2022. "Pre-bargaining Investment Implies a Pareto Ranking of Bargaining Solutions," Group Decision and Negotiation, Springer, vol. 31(4), pages 769-787, August.
    4. Alfred Endres & Andreas Lüdeke, 1998. "Limited Liability and Imperfect Information—On the Existence of Safety Equilibria Under Products Liability Law," European Journal of Law and Economics, Springer, vol. 5(2), pages 153-165, March.
    5. Manfred J. Holler & Bengt-Arne Wickström, 1998. "The Scandal Matrix: The Use of Scandals in the Progress of Society," CESifo Working Paper Series 159, CESifo.
    6. Kirstein, Roland, 2005. "Bayesian Monitoring," CSLE Discussion Paper Series 2005-06, Saarland University, CSLE - Center for the Study of Law and Economics.
    7. Manfred J. Holler & Barbara Klose-Ullmann, 2008. "Wallenstein’s Power Problem and Its Consequences," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 2(3), pages 197-218, December.
    8. Guth, Werner & Ritzberger, Klaus & van Damme, Eric, 2004. "On the Nash bargaining solution with noise," European Economic Review, Elsevier, vol. 48(3), pages 697-713, June.
    9. Volodymyr Babich & Simone Marinesi & Gerry Tsoukalas, 2021. "Does Crowdfunding Benefit Entrepreneurs and Venture Capital Investors?," Manufacturing & Service Operations Management, INFORMS, vol. 23(2), pages 508-524, March.
    10. Ley, Eduardo, 2006. "Statistical inference as a bargaining game," Economics Letters, Elsevier, vol. 93(1), pages 142-149, October.
    11. Yu, Shasha & Lei, Ming & Deng, Honghui, 2023. "Evaluation to fixed-sum-outputs DMUs by non-oriented equilibrium efficient frontier DEA approach with Nash bargaining-based selection," Omega, Elsevier, vol. 115(C).
    12. Yashiv, Eran, 2007. "Labor search and matching in macroeconomics," European Economic Review, Elsevier, vol. 51(8), pages 1859-1895, November.
    13. Iraklis Kollias & John Leventides & Vassilios G. Papavassiliou, 2024. "On the solution of games with arbitrary payoffs: An application to an over‐the‐counter financial market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1877-1895, April.
    14. Takeuchi, Ai & Veszteg, Róbert F. & Kamijo, Yoshio & Funaki, Yukihiko, 2022. "Bargaining over a jointly produced pie: The effect of the production function on bargaining outcomes," Games and Economic Behavior, Elsevier, vol. 134(C), pages 169-198.
    15. Lili Liu & Guochun Tang & Baoqiang Fan & Xingpeng Wang, 2015. "Two-person cooperative games on scheduling problems in outpatient pharmacy dispensing process," Journal of Combinatorial Optimization, Springer, vol. 30(4), pages 938-948, November.
    16. Hwang, Sung-Ha & Rey-Bellet, Luc, 2021. "Positive feedback in coordination games: Stochastic evolutionary dynamics and the logit choice rule," Games and Economic Behavior, Elsevier, vol. 126(C), pages 355-373.
    17. Vesa Kanniainen & Juha-Matti Lehtonen, 2019. "Offset Contracts as an Insurance Device in Building the National Security," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(1), pages 85-97, January.
    18. Eric van Damme & Xu Lang, 2022. "Two-Person Bargaining when the Disagreement Point is Private Information," Papers 2211.06830, arXiv.org, revised Jan 2024.
    19. Cédric Wanko, 2008. "Approche Conceptuelle et Algorithmique des Equilibres de Nash Robustes Incitatifs," Working Papers 08-03, LAMETA, Universtiy of Montpellier, revised Feb 2008.
    20. Jacob Engwerda & Davoud Mahmoudinia & Rahim Dalali Isfahani, 2016. "Government and Central Bank Interaction under Uncertainty: A Differential Games Approach," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 20(2), pages 225-259, Spring.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ratsoc:v:30:y:2018:i:3:p:377-390. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.