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Powers, J. E., and Brooks, E. N. 2008. Penalties and rewards for over- and underages of catch allocations. – ICES Journal of Marine Science, 65: 1541–1551. Many fisheries are managed using a total allowable catch (TAC) that is subsequently sub-allocated to different fisheries sectors. These allocations are then monitored separately to ensure the adherence of each fishery to its particular allocation quota and to the overall TAC. In some management arenas, there are systems of “payback” where over- and underages are punished or rewarded using particular decision rules. Differences between fishing gear, the sizes and ages of fish being targeted by those gears, and the spatio-temporal distribution of the fishers using those gears can lead to different precision, accuracy, and cost of monitoring the allocation, affecting the probability that an overall management objective is reached. Weaknesses in monitoring may be exploited by user groups in their competition for larger catches and, subsequently, bigger allocations, so differential monitoring precision and accuracy can lead to both short- and long-term reallocations, i.e. a new set of winners and losers. Simulations in a management strategy evaluation framework were used to demonstrate the implications of alternative decision rules regarding payback on conservation and sustainability objectives and rebuilding time frames. The efficacy of the rules under alternative monitoring systems was also examined. Decision rules allowing payback prolong rebuilding (compared with perfect implementation or more precautionary TACs), especially if monitoring is biased (catches misreported) or imprecise. When precision of reported catches was increased and/or bias decreased, better yields and stock abundance resulted. When overages were penalized and underages not rewarded, recovery was achieved earlier. Conversely, policies in which transgressions were ignored and underages rewarded did not perform well. Underreporting by one nation may result in stocks that are well below the stock size conservation standards, yet produce substantial gains in yield for that nation, unless other nations retaliate by underreporting.