Compliance Dynamics Generated by Social Interaction Rules

Arbeitspapier

We study compliance dynamics generated by a large set of behavioral rules describing social interaction in a population of agents facing an enforcement authority. When the authority adjusts the auditing probability every period, cycling in cheating-auditing occurs: Intensive monitoring induces compliance, but with high compliance there is incentive for lax monitoring; with less monitoring, compliance starts decreasing, and then there is an incentive to intensify monitoring. Thus, the real life phenomenon of compliance fluctuations is ex-plained by the nature of social interaction process rather than by exogenous parameter shifts. For the authority committed to a fixed auditing probability, we derive a sufficient condition for fines to be effective means of deterrence. Our analysis can be applied, among others, to crime, tax evasion, safety regulations, employment and environmental protection.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4767

Classification and Topics

• Classification: Wirtschaft ; Game Theory and Bargaining Theory: Other ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Tax Evasion and Avoidance ; Illegal Behavior and the Enforcement of Law
• Subject: social interaction ; compliance ; random matching ; behavioral rule ; learning

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lipatov, Vilen
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/96876
• Last update: 10.03.2025, 11:44 AM CET