Optimal Law Enforcement with Self-Reporting of Behavior

Abstract

Self-reporting --the reporting by parties of their own behavior to an enforcement authority --is a commonly observed aspect of law enforcement, as in the context of environmental and safety regulation.We add self-reporting to the model of the control of harmful externalities through probabilistic law enforcement.Optimal self-reporting schemes are characterized and are shown to offer two advantages over schemes without self-reporting: enforcement resources are saved because individuals who are led to report harmful acts need not be identified; risk is reduced because individuals bear certain sanctions when they report their behavior, rather than face uncertain sanctions.

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