Law & Economics Working Papers
This article offers a new mechanism of law enforcement, combining sanctions and rewards into a scheme of "reversible rewards." A law enforcer sets up a pre-committed fund and offers it as reward to another party to refrain from violation. If the violator turns down the reward, the enforcer can use the money in the fund for one purpose only—to pay for punishment of the violator. The article shows that this scheme doubles the effect of funds invested in enforcement, and allows enforcers to stop violations that would otherwise be too difficult to deter. It argues that reversible rewards could be used to bolster enforcement in international and domestic law, and could also be applied strategically in litigation.
Omri Ben-Shahar & Anu Bradford, "Reversible Rewards" (John M. Olin Program in Law and Economics Working Paper No. 557, 2011).