Subgame Perfect Punishment for Repeat Offenders

First we show that for wealth-constrained agents who may commit an act twice the optimal sanctions are the offender's entire wealth for the first and zero for the second crime. Then we ask the question whether this decreasing sanction scheme is subgame perfect (time consistent), i.e., does a rent-seeking government stick to this sanction scheme after the first crime has occurred. If the benefit and/or the harm from the crime are not too large, this is indeed the case; otherwise, equal sanctions for both crimes are optimal.crime and punishment; repeat offenders; subgame perfection

Incentive Compatible Reimbursement Schemes for Physicians

We consider physicians with fixed capacity levels. If a physician's capacity exceeds demand, she may have an incentive to overtreat, i.e., she may provide unnecessary treatments to use up idle capacity. By contrast, with excess demand she may undertreat, i.e., she may not provide necessary treatments since other activities are financially more attractive. We first show that simple fee-for-service reimbursement schemes do not provide proper incentives. If insurers use, however, fee-for-service schemes with quantity restrictions, they solve the fraudulent physician problem.credence goods; expert services; incentives; medical doctors; demand inducement; insurance

Escalating Penalties for Repeat Offenders

Agents may commit a crime twice. The act is inefficient so that the agents are to be deterred. Even if an agent is law abiding, she may still commit the act accidentally. The agents are wealth constrained. The government seeks to minimize the probability of apprehension. If the benefit from the crime is small, the optimal sanction scheme is decreasing in the number of offenses. In contrast, if the benefit is large, sanctions are increasing in the number of offenses. Increasing sanctions do not make the criminal track less attractive; they make being being honest more attractivecrime and punishment; repeat offenders

A Note on the Optimal Punishment for Repeat Offenders

Agents may commit a crime twice. The act is inefficient so that the agents are to be deterred. The agents are wealth constrained so that increasing the fine for the first offense means a reduction in the sanction for the second offense and vice versa. The agents may follow history dependent strategies. The government seeks to minimize the probability of apprehension. The optimal sanction scheme is decreasing rather than increasing in the number of offenses. Indeed, the sanction for the first offense equals the entire wealth while the sanction for the second offense is zero.crime and punishment; repeat offenders

Non-comparative versus Comparative Advertising as a Quality Signal

Two firms produce a product with a horizontal and a vertical characteristic. We call the vertical characteristic quality. The difference in the quality levels determines how the firms share the market. Firms know the quality levels, consumers do not. Under non-comparative advertising a firm may signal its own quality. Under comparative advertising firms may signal the quality differential. In both scenarios the firms may attempt to mislead at a cost. If firms advertise, in both scenarios equilibria are revealing. Under comparative advertising the firms never advertise together which they may do under non-comparative advertising.advertising; costly state falsification; signalling

The Optimal Amount of Falsified Testimony

An arbiter can decide a case on the basis of his priors or he can ask for further evidence from the two parties to the conflict. The parties may misrepresent evidence in their favor at a cost. The arbiter is concerned about accuracy and low procedural costs. When both parties testify, each of them distorts the evidence less than when they testify alone. When the fixed cost of testifying is low, the arbiter hears both, for intermediate values one, and for high values no party at all. The ability to commit to an adjudication scheme makes it more likely that the arbiter requires evidence.Evidence production, procedure, costly state falsification, adversarial, inquisitorial

Non-Comparative versus Comparative Advertising of Quality

Two firms produce a good with a horizontal and a vertical characteristic called quality. The difference in the unobservable quality levels determines how the firms share the market. We consider two scenarios: in the first one, firms disclose quality; in the second one, they send costly signals thereof. Under non-comparative advertising a firm advertises its own quality, under comparative advertising a firm advertises the quality differential. In either scenario, under comparative advertising the firms never advertise together which they may do under non-comparative advertising. Moreover, under comparative advertising firms do not advertise when the informational value to consumers is small.Quality, Advertising, Disclosure, Signalling

Adversarial versus Inquisitorial Testimony

An arbiter can decide a case on the basis of his priors, or the two parties to the conflict may present further evidence. The parties may misrepresent evidence in their favor at a cost. At equilibrium the two parties never testify together. When the evidence is much in favor of one party, this party testifies. When the evidence is close to the prior mean, no party testifies. We compare this outcome under a purely adversarial procedure with the outcome under a purely inquisitorial procedure (Emons and Fluet 2009). We provide sufficient conditions on when one procedure is better than the other one.evidence production; procedure; costly state falsification; adversarial; inquisitorial

Book review\ud Andre, J., Owens, D. A., & Harvey, Jr., L. O. (Eds.). (2003). Visual perception: The influence of H. W. Leibowitz. Washington, DC: APA.

In the edifice of visual psychology there are many mansions. This book comes from one of the finest in it.\ud The influence of Herschel Leibowitz has been immense (e.g., teaching in four languages and publishing\ud more than 250 papers) blending rigorous inquiry with inspirational teaching and dedicated public\ud service. This “Decade of Behavior” festschrift is exemplary in many respects, such as giving a readable\ud account of complicated vision problems, as bridging applied and theoretical questions, as to the\ud productiveness of cross-disciplinary collaboration, and, last but not least, to the significance of an\ud inspirational teacher, mentor, and colleague. Reading the book will give you a kind of immersion experience,\ud typical in style of the man himself. The book primes the pump and lets the reader go on an inspirational journey