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Imperfect Public Monitoring with Costly Punishment: An Experimental Study

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  • Attila Ambrus
  • Ben Greiner

Abstract

This paper experimentally investigates the effects of a costly punishment option on cooperation and social welfare in long, finitely repeated public good contribution games. In a perfect monitoring environment, increasing the severity of the potential punishment monotonically increases average net payoffs. In a more realistic imperfect monitoring environment, we find a U-shaped relationship. Access to a standard punishment technology in this setting significantly decreases net payoffs, even in the long run. Access to a severe punishment technology leads to roughly the same payoffs as with no punishment option, as the benefits of increased cooperation offset the social costs of punishing. (JEL C92, H41, K42)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 7 (December)
Pages: 3317-32

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:7:p:3317-32

Note: DOI: 10.1257/aer.102.7.3317
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References

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  1. Hwang, Sung-Ha & Bowles, Samuel, 2012. "Is altruism bad for cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 330-341.
  2. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  3. Sainty, Barbara, 1999. "Achieving greater cooperation in a noisy prisoner's dilemma: an experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 421-435, July.
  4. Rand, David Gertler & Dreber, Anna & Fudenberg, Drew & Ellingson, Tore & Nowak, Martin A., 2009. "Positive Interactions Promote Public Cooperation," Scholarly Articles 3804483, Harvard University Department of Economics.
  5. Nikos Nikiforakis, 2010. "Experimental Economics," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 337-345.
  6. Roth, Alvin & Bereby-Meyer, Yoella, 2006. "The Speed of Learning in Noisy Games: Partial Reinforcement and the Sustainability of Cooperation," Scholarly Articles 2580381, Harvard University Department of Economics.
  7. Klaus Abbink & Abdolkarim Sadrieh, 2008. "The Pleasure of Being Nasty," FEMM Working Papers 08037, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  8. Patel, Amrish & Cartwright, Edward & Mark, Van Vugt, 2010. "Punishment Cannot Sustain Cooperation in a Public Good Game with Free-Rider Anonymity," Working Papers in Economics 451, University of Gothenburg, Department of Economics.
  9. Kahn, Lawrence M. & Murnighan, J. Keith, 1993. "Conjecture, uncertainty, and cooperation in prisoner's dilemma games : Some experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 22(1), pages 91-117, September.
  10. Fudenberg, Drew & Dreber, Anna & Rand, David G. & Nowak, Martin, 2008. "Winners Don't Punish," Scholarly Articles 2252594, Harvard University Department of Economics.
  11. Aoyagi, Masaki & Fréchette, Guillaume, 2009. "Collusion as public monitoring becomes noisy: Experimental evidence," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1135-1165, May.
  12. Cason, Timothy N. & Khan, Feisal U., 1999. "A laboratory study of voluntary public goods provision with imperfect monitoring and communication," Journal of Development Economics, Elsevier, vol. 58(2), pages 533-552, April.
  13. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  14. Bolton, Gary E. & Katok, Elena & Ockenfels, Axel, 2005. "Cooperation among strangers with limited information about reputation," Journal of Public Economics, Elsevier, vol. 89(8), pages 1457-1468, August.
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Citations

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Cited by:
  1. Heike Auerswald & Carsten Schmidt & Marcel Thum & Gaute Torsvik, 2013. "Teams Punish Less," CESifo Working Paper Series 4406, CESifo Group Munich.
  2. Daniela Grieco & Marco Faillo & Luca Zarri, 2013. "Top Contributors as Punishers," Working Papers 24/2013, University of Verona, Department of Economics.
  3. Alexia Gaudeul & Paolo Crosetto & Gerhard Riener, 2014. "Fear of being left alone drives inefficient exit from partnerships. An experiment," Jena Economic Research Papers 2014-012, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  4. Paolo Crosetto & Alexia Gaudeul & Gerhard Riener, 2012. "Partnerships, Imperfect Monitoring and Outside Options: Theory and Experimental Evidence," Jena Economic Research Papers 2012-052, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Engelmann, Dirk & Nikiforakis, Nikos, 2013. "In the long-run we are all dead: On the benefits of peer punishment in rich environments," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79743, Verein für Socialpolitik / German Economic Association.
  6. Simon Gaechter, 2014. "Human Pro-Social Motivation and the Maintenance of Social Order," CESifo Working Paper Series 4729, CESifo Group Munich.
  7. Sven Fischer & Kristoffel Grechenig & Nicolas Meier, 2013. "Cooperation under punishment: Imperfect information destroys it and centralizing punishment does not help," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2013_06, Max Planck Institute for Research on Collective Goods.
  8. Catherine Roux & Christian Thöni, 2013. "Collusion Among Many Firms: The Disciplinary Power of Targeted Punishment," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 13.02, Université de Lausanne, Faculté des HEC, DEEP.
  9. Alessandro Bucciol & Natalia Montinari & Marco Piovesan & Jean-Robert Tyran, 2014. "It Wasn't Me! Visibility and Free Riding in Waste Sorting," Discussion Papers 14-12, University of Copenhagen. Department of Economics.
  10. Bernd Irlenbusch & Rainer Michael Rilke, 2013. "(Public) Good Examples - On the Role of Limited Feedback in Voluntary Contribution Games," Cologne Graduate School Working Paper Series 04-04, Cologne Graduate School in Management, Economics and Social Sciences.
  11. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2014. "Discretionary Sanctions and Rewards in the Repeated Inspection Game," Discussion Papers 2014-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  12. Noussair, Charles & van Soest, Daan & Stoop, Jan, 2011. "Punishment, reward, and cooperation in a framed field experiment," MPRA Paper 34067, University Library of Munich, Germany.

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