Search Delegation Policies for Compliance Enforcement
Speakers
Saed Alizamir
Associate Professor, Yale School of Management
Saed Alizamir is an Associate Professor of Operations Management at Yale School of Management. He joined Yale in 2013 after receiving a PhD in Decision Sciences from Duke University’s Fuqua School of Business. Professor Alizamir’s research interests lies in the area of social responsibility and public sector operations. In his research, he focuses on problems in public policy that involve private-public interactions and dynamic decision-making. The goal of his research is to provide normative recommendations that inform better policy decisions, especially in areas where not enough data exists to run full-fledged empirical studies. He has worked on government subsidy instruments in renewable energy industry and electric vehicle markets, agricultural supply chains, demand management in residential electricity sector, and optimal control of diagnostic systems such as nurse triage. In 2021, Professor Alizamir was named as one of the World’s Best 40 Under 40 Business School Professors by Poets & Quants. He serves as an Associate Editor for the Operations Research journal, and co-chaired the M&SOM cluster for the INFORMS conference in 2019. At Yale, he teaches MBA level courses in core Operations, Managing Sustainable Operations, and Quantitative Decision Models.
| Date: |
| Thursday, 23 March 2023 |
| Time: |
| 10:00 am - 11:30 am |
| Venue: |
|
Institute of Data Science Innovation 4.0 I4-01-03 (Level 1, Seminar Room) 3 Research Link Singapore 117602 (Map) |
Abstract
Enforcement of regulatory compliance over time often involves intermittent search in the form of inspection in order to reveal the compliance state of the regulated entity. To enable cost-effective enforcement of environmental compliance standards, regulatory agencies encourage production firms to voluntarily discover and correct compliance violations. Although such self-regulation activities often bring desired benefits, they create nontrivial challenges. To study this tradeoff, we develop a model that captures the interactions between a regulator and a firm that unfold over time. Because constant monitoring is prohibitive, the regulator and the firm perform costly inspections to discover the compliance state of production. If the regulator detects noncompliance, the firm is required to pay penalty and restore compliance. To avoid penalty, the firm performs self-inspections to preemptively detect noncompliance and restore compliance without reporting the action to the regulator. We show that inefficiency caused by the firm’s private action is amplified if the regulator adopts a policy of requiring permanent restoration. Under such a policy, the firm’s self-inspections may leave the regulator and the environment worse off. By contrast, self-inspections always bring a net benefit to the regulator if repeated temporary restorations are allowed. We also find that, due to self-inspections, a paradoxical situation arises where the regulator prefers mandating permanent restoration despite having a small chance of enforcing it.