Reformulation of the Enforcement Action Model Using Game Theory

Abstract

The traditional model in regulatory enforcement strategies (the enforcement action model) has taught that different types of violators require different responses from the administration, especially from front-line workers. However, this model does not always capture well the “interaction” between the administration and the regulatee in the enforcement process. Therefore, in this paper, we attempt to reformulate the enforcement action model using game theory, which is strong in analyzing interactions. Through the analysis of the multiple models, the “regulatory game” and the “bargaining game”, we found that the structure of the interaction :(1) it is impossible to discourage the “opportunist” from committing non-compliance while responding to the “incompetent” with guidance (familiarization strateey), (2) in order to stave off the neglect of non-compliance by “overly passive” administrations, it is effective to reduce the payoff that administrations gain when they neglect non-compliance, and (3) the effectiveness of the “adaptive strategy” against “objector” depends on the evaluation of the administration and the regulatee to the administrative litigation as a point of disagreement in the bargaining and on the patience of the administration in protracted bargaining. In addition, by clarifying the mechanisms that lead from assumptions to conclusions, we present hypotheses about regulatory policy and contribute to the further development of research in the future.