Social sanctions coordinate and motivate
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This article examines the effects of social sanctions on various repayment games. Compared to the model in [BC95] the avoidable-harm-concept of social sanctions is kept, but the setup is simpler and cleaner. And yet, the two main roles of social sanctions can be clearly demonstrated: its incentive effect and its coordination effect. Moreover, the model presented here reaches beyond the results in [BC95] in several ways. Firstly, all shapes are considered ([BC95] only consider the unrestricted shape). Secondly, group size is increased to three ([BC95] only analyse groups with two borrowers). Thirdly, social sanctions are combined with individual liability ([BC95] only examine social sanctions in conjunction with joint liability).
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