Comment on “The Influence of Conformity and Moral Concerns on the Level of Optimal Sanctions”

Abstract

The focus of the analysis is the optimal sanctions, sA and sF, when they are allowed to differ between A and F. It is shown that sA need not be greater than sF and may in fact typically be smaller. Next, intriguing comparative-statics results are derived with respect to the moral parameters. An exogenous increase in µA or µF increases the optimal sanction sA, whereas the effect on sF is nil when sanctions are socially costless and positive when they are costly. By contrast, an increase in σA or σF either decreases the optimal sanctions or has no effect.