Solving the Volunteer's Dilemma: The Efficiency of Rewards Versus Punishments: The efficiency of rewards versus punishments

Shmuel Leshem, Avraham Tabbach

Research output: Contribution to journalArticlepeer-review

Abstract

This paper studies a class of second-best solutions to the Volunteer's Dilemma. We consider a game in which each one of n players must simultaneously choose whether to incur a cost and thereby prevent a social harm. Players could be rewarded for helping, be punished for not helping, or be subject to any combination of rewards and punishments. We show that because of the substitutability of players' efforts, the use of rewards rather than punishments minimizes social costs (expected costs of helping, expected harm, and expected transfer costs) for nearly any number of players and ratio of cost-of-helping to social harm. This helps to explain the paucity of affirmative legal duties and the prevalence of whistle-blower and most-wanted rewards.

Original languageEnglish
Pages (from-to)1-32
Number of pages32
JournalAmerican Law and Economics Review
Volume18
Issue number1
DOIs
StatePublished - Jan 2016

Fingerprint

Dive into the research topics of 'Solving the Volunteer's Dilemma: The Efficiency of Rewards Versus Punishments: The efficiency of rewards versus punishments'. Together they form a unique fingerprint.

Cite this