THE USE OF COSTLESS INSPECTION IN ENFORCEMENT

The process whereby a reluctant decision maker may be induced to behav e in accordance with a rule, regulation, or law, is examined in a gene ral context. It is assumed that an enforcement agency can make use of a costless inspection process, which would provide a free, but possibl y inaccurate, assessment of the subject's behavior. The agency also ha s some power of punishment. When should evidence be collected by the a gency, and how should it be used? How can an enforcement system be str uctured so as to maximize the level of compliance? How does compliance depend on the subject's private gain for violation, the level of puni shment, the risk of errors (of both kinds) in the inspection report, a nd other parameters? These questions and others are addressed using no n-cooperative game models. Answers give new insights into real-world e nforcement problems in areas as diverse as environmental regulation an d arms control.