Optimal enforcement of law is examined in a model with specific enforcement effort--effort devoted toward apprehending individuals who have committed a single type of harmful act--and general enforcement effort--effort devoted toward apprehending individuals who have committed any of a range of harmful acts (a police officer on patrol, for instance, is able to apprehend many types of violators of law). If enforcement effort is specific, optimal sanctions are extreme for all acts. If enforcement effort is general, however, optimal sanctions rise with the harmfulness of acts and reach the extreme only for the most harmful acts.

Self-reporting--the reporting by parties of their own behavior to an enforcement authority--is a commonly observed aspect of law enforcement, such as in the context of environmental and safety regulation. We add self-reporting to the model of the control of harmful externalities through probabilistic law enforcement, and we characterize the optimal scheme. Self-reporting offers two advantages over schemes without self-reporting: enforcement resources are saved because individuals who report their harmful acts need not be detected, and risk is reduced because individuals who report their behavior bear certain rather than uncertain sanctions.

The primary purpose of unemployment insurance (U.I.) is no doubt to insure individuals against loss of wage income. However, U.I. is commonly believed to adversely affect job search behavior and to lengthen the duration of unemployment. With these issues in mind, this paper asks how U.I. benefits ought to be paid out over time. Specifically, the paper uses a theoretical model to determine characteristics of the time sequence of benefits that maximizes the expected utility of the unemployed, given that they act in a self-interested way and given the total size of the U.I. budget.

Optimal enforcement of law is examined in a model with specific enforcement effort--effort devoted toward apprehending individuals who have committed a single type of harmful act--and general enforcement effort--effort devoted toward apprehending individuals who have committed any of a range of harmful acts (a police officer on patrol, for instance, is able to apprehend many types of violators of law). If enforcement effort is specific, optimal sanctions are extreme for all acts. If enforcement effort is general, however, optimal sanctions rise with the harmfulness of acts and reach the extreme only for the most harmful acts.

Because uncertainty often enters into economic transactions when payment is deferred, it may be advantageous to make the amount of payment depend on the occurrence of uncertain events. This general method of accomplishing risk-sharing is studied and its relevance is discussed in two cases: (1) uncertainty over the rate of inflation and cost-of-living escalators; (2) uncertainty over the exchange rate and foreign currency payment plans.

How should moral sanctions and moral rewards—the moral sentiments involving feelings of guilt and of virtue—be employed to govern individuals’ behavior if the objective is to maximize social welfare? In the model that we examine, guilt is a disincentive to act and virtue is an incentive because we assume that they are negative and positive sources of utility. We also suppose that guilt and virtue are costly to inculcate and are subject to certain constraints on their use. We show that the moral sentiments should be used chiefly to control externalities and further that guilt is best to employ when most harmful acts can successfully be deterred whereas virtue is best when only a few individuals can be induced to behave well. We also contrast the optimal use of guilt and virtue to optimal Pigouvian taxation and discuss extensions of our analysis.

The public at large, many policymakers, and a number of economists hold views of social welfare that are non‐welfarist. That is, they attach some importance to factors other than the effects of policies on individuals’ utilities. We show, however, that any non‐welfarist method of policy assessment violates the Pareto principle.

Self-reporting --the reporting by parties of their own behavior to an enforcement authority --is a commonly observed aspect of law enforcement, as in the context of environmental and safety regulation. We add self-reporting to the model of the control of harmful externalities through probabilistic law enforcement. Optimal self-reporting schemes are characterized and are shown to offer two advantages over schemes without self-reporting: enforcement resources are saved because individuals who are led to report harmful acts need not be identified; risk is reduced because individuals bear certain sanctions when they report their behavior, rather than face uncertain sanctions.