Optimal Law Enforcement with Self-Reporting of Behavior
NBER Working Paper No. 3822 (Also Reprint No. r1905)
Self-reporting -- the reporting by parties of their own behavior to an enforcement authority -- is a commonly observed aspect of law enforcement, as in the context of environmental and safety regulation. We add self-reporting to the model of the control of harmful externalities through probabilistic law enforcement. Optimal self-reporting schemes are characterized and are shown to offer two advantages over schemes without self-reporting: enforcement resources are saved because individuals who are led to report harmful acts need not be identified; risk is reduced because individuals bear certain sanctions when they report their behavior, rather than face uncertain sanctions.
Published: Journal of Political Economy, Vol. 102, no. 3, pp. 583-606, (June 1994).