Mailath et al. on When and How Punishment Must Fit the Crime

George J. Mailath , Volker Nocke and Lucy White (University of Pennsylvania - Department of Economics , University of Mannheim - Department of Economics and Harvard Business School - Finance Unit) have posted When and How the Punishment Must Fit the Crime on SSRN. Here is the abstract:

In repeated normal-form (simultaneous-move) games, simple penal codes (Abreu, 1986, 1988) permit an elegant characterization of the set of subgame-perfect outcomes. We show that the logic of simple penal codes fails in repeated extensive-form games. By means of examples, we identify two types of settings in which a subgame-perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator, but also to the nature of the deviation.