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Punishment, inequality, and welfare: a public good experiment

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  • David Masclet

    ()

  • Marie-Claire Villeval

Abstract

This paper reports the results of an experiment that investigates the relationships between inequality and punishment. In particular, we analyze how inter-personal comparisons affect altruistic punishment behavior. In addition, we examine how punishment affects inequality over time. We compare two treatments of a two-stage public good game, one in which costly punishment reduces the immediate payoff inequality between the punisher and the target, and one in which it does not affect the current level of inequality. Our results indicate that subjects punish even when they cannot alter the current distribution of payoffs. We find however that in both treatments, the intensity of punishment increases in the level of inequality. Finally, despite its cost, we show that punishment improves welfare in association with a decrease in the level of inequality over time.

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Bibliographic Info

Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 31 (2008)
Issue (Month): 3 (October)
Pages: 475-502

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Handle: RePEc:spr:sochwe:v:31:y:2008:i:3:p:475-502

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References

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  1. Oliver Bochet & Talbot Page & Louis Putterman, 2002. "Communication and Punishment in Voluntary Contribution Experiments," Working Papers 2002-29, Brown University, Department of Economics.
  2. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
  3. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2005. "Driving Forces Behind Informal Sanctions," IZA Discussion Papers 1635, Institute for the Study of Labor (IZA).
  4. Peter Matthews & Jeffrey Carpenter, 2002. "Why Punish: Social Reciprocity and the Enforcement of Prosocial Norms," Middlebury College Working Paper Series 0213, Middlebury College, Department of Economics.
  5. Silvia Pezzini & Robert MacCulloch, 2003. "The role of freedom, growth and religion in the taste for revolution," Departmental Working Papers 2003-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  6. Armin Falk & Urs Fischbacher, 2001. "A Theory of Reciprocity," CESifo Working Paper Series 457, CESifo Group Munich.
  7. Carpenter, Jeffrey P., 2007. "Punishing free-riders: How group size affects mutual monitoring and the provision of public goods," Games and Economic Behavior, Elsevier, vol. 60(1), pages 31-51, July.
  8. Martijn Egas & Arno Riedl, 2005. "The Economics of Altruistic Punishment and the Demise of Cooperation," Tinbergen Institute Discussion Papers 05-065/1, Tinbergen Institute.
  9. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
  10. Charness, Gary & Rabin, Matthew, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt3d04q5sm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  11. Robert MacCulloch & Silvia Pezzini, 2007. "Money, religion and revolution," Economics of Governance, Springer, vol. 8(1), pages 1-16, January.
  12. Masclet, D. & Noussair, C. & Tucker, S. & Villeval, M.C., 2001. "Monetary and Non-monetary Punishment in the Voluntary Contributions Mechanism," Purdue University Economics Working Papers 1141, Purdue University, Department of Economics.
  13. Jeffrey Carpenter & Peter Hans Matthews, 2004. "Social Reciprocity," Middlebury College Working Paper Series 0229r, Middlebury College, Department of Economics.
  14. Simon Gachter & Ernst Fehr, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September.
  15. Samuel Bowles & Herbert Gintis, 2000. "The Evolution of Strong Reciprocity," UMASS Amherst Economics Working Papers 2000-05, University of Massachusetts Amherst, Department of Economics.
  16. Neumark, David & Postlewaite, Andrew, 1998. "Relative income concerns and the rise in married women's employment," Journal of Public Economics, Elsevier, vol. 70(1), pages 157-183, October.
  17. Houser, Daniel & Xiao, Erte & McCabe, Kevin & Smith, Vernon, 2008. "When punishment fails: Research on sanctions, intentions and non-cooperation," Games and Economic Behavior, Elsevier, vol. 62(2), pages 509-532, March.
  18. Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Microeconomics 0305007, EconWPA.
  19. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
  20. Anderson, Christopher M. & Putterman, Louis, 2006. "Do non-strategic sanctions obey the law of demand? The demand for punishment in the voluntary contribution mechanism," Games and Economic Behavior, Elsevier, vol. 54(1), pages 1-24, January.
  21. Astrid Hopfensitz & Ernesto Reuben, 2009. "The Importance of Emotions for the Effectiveness of Social Punishment," Economic Journal, Royal Economic Society, vol. 119(540), pages 1534-1559, October.
  22. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
  23. Egas, Martijn & Riedl, Arno, 2005. "The Economics of Altruistic Punishment and the Demise of Cooperation," IZA Discussion Papers 1646, Institute for the Study of Labor (IZA).
  24. Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
  25. Jeffrey Carpenter, 2002. "The Demand for Punishment," Middlebury College Working Paper Series 0243, Middlebury College, Department of Economics.
  26. Astrid Hopfensitz & Ernesto Reuben, 2005. "The Importance of Emotions for the Effectiveness of Social Punishment," Tinbergen Institute Discussion Papers 05-075/1, Tinbergen Institute, revised 28 Mar 2006.
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Citations

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Cited by:
  1. Barmettler, Franziska & Fehr, Ernst & Zehnder, Christian, 2011. "Big Experimenter Is Watching You! Anonymity and Prosocial Behavior in the Laboratory," IZA Discussion Papers 5925, Institute for the Study of Labor (IZA).
  2. Ernesto Reuben & Arno Riedl, 2009. "Enforcement of Contribution Norms in Public Good Games with Heterogeneous Populations," CESifo Working Paper Series 2725, CESifo Group Munich.
  3. Charness, Gary & Masclet, David & Villeval, Marie Claire, 2012. "The Dark Side of Competition for Status," University of California at Santa Barbara, Economics Working Paper Series qt1vr4g446, Department of Economics, UC Santa Barbara.
  4. Haoran He & Marie Claire Villeval, 2014. "Are teams less inequality averse than individuals?," Working Papers halshs-00996545, HAL.
  5. Oechssler, Jörg, 2011. "Finitely repeated games with social preferences," Working Papers 0515, University of Heidelberg, Department of Economics.
  6. Daniele Nosenzo & Martin Sefton, 2012. "Promoting Cooperation: the Distribution of Reward and Punishment Power," Discussion Papers 2012-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  7. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute for the Study of Labor (IZA).
  8. Simon Gaechter & Benedikt Herrmann, 2008. "Reciprocity, culture, and human cooperation: Previous insights and a new cross-cultural experiment," Discussion Papers 2008-14, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  9. Armin Falk & Stephan Meier & Christian Zehnder, 2010. "Did we Overestimate the Role of Social Preferences? The Case of Self-Selected Student Samples," CESifo Working Paper Series 3177, CESifo Group Munich.
  10. Christoph Engel, 2013. "Deterrence by Imperfect Sanctions – A Public Good Experiment," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2013_09, Max Planck Institute for Research on Collective Goods.

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