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This research aims to resolve the paradox of penalty-setting in decision problems regarding vigilant monitors and their environments.

August 5, 2026Open Access

Closing the Compounding Seat: Equilibrium Charge-Setting on a Destructible Seat

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This research aims to resolve the paradox of penalty-setting in decision problems regarding vigilant monitors and their environments.
Analyzed the decision-making framework involving charge-setting and monitor behavior.
Characterized the equilibrium responses based on the type of seat: destructible and insulated.
Examined the implications of various charges on monitor vigilance and welfare.
On destructible seats, monitors consistently show increased vigilance without falling equilibrium, while insulated seats allow charges to be reduced.
The closure costs more in terms of welfare on destructible seats than on insulated ones.
A planner weighing the monitor's welfare ultimately leads to abandonment of penalties based on the charge-setter's preferences.

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Randomized trial examines charge-setting's impact on monitor vigilance, suggesting implications for deterrence economics.

Mikio Hanaeda (2026) studied this question.

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