How Jeremy Bentham Would Defend Against Coordinated Attacks
44 Pages Posted: 14 Sep 2015
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How Jeremy Bentham Would Defend Against Coordinated Attacks
How Jeremy Bentham Would Defend Against Coordinated Attacks
Date Written: August 12, 2015
Abstract
How can a single player defend against the threat of a coordinated attack by a group? For example, how can a central bank defend a currency peg against speculators, a government against a revolution or a prison warden against a breakout? Bentham (1787) proposed an innovative prison concept based on information asymmetries – the “panopticon” – as an answer to this question. We consider different information structures in a stylized model of a prison, in which a warden chooses a costly guard level with the goal of avoiding breakouts. Successful breakouts require coordination among prisoners. We show that the information structure corresponding to the panopticon often performs best, especially if there are many prisoners.
Keywords: panopticon, coordination games, global games, transparency
JEL Classification: D23, D74, D82, E58, Z13, F31
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