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Getting Punnishment Right: Do Costly Monitoring or Redustributive Punishment Help?

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We introduce new treatments of a voluntary contribution mechanism with opportunities to punish, to see how contributions and punishments change when (a) each dollar lost in punishment must be awarded to another team member and/or when (b) obtaining information on individuals’ contributions is a costly choice. Conjectures that tying punishments to rewards might reduce punishment of high contributors (perverse punishment) or increase overall punishing are not completely born out, but innovation (a) nonetheless succeeds in making the net punishment of high contributors much less common because they receive enough rewards to offset punishment. A surprise finding is that innovation (b) also decreases the incidence of misdirected punishment, since high contributors do more monitoring than low ones while low contributors do most of the perverse punishing. Both innovations raise both contributions and earnings relative to the familiar VCM-with-punishment treatment.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2008-1.

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Date of creation: 2008
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Handle: RePEc:bro:econwp:2008-1

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Postal: Department of Economics, Brown University, Providence, RI 02912

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  2. Josef Falkinger & Ernst Fehr & Simon Gaechter, . "A Simple Mechanism for the Efficient Provision of Public Goods - Experimental Evidence," IEW - Working Papers 003, Institute for Empirical Research in Economics - University of Zurich.
  3. 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.
  4. Jeffrey Carpenter & Peter Matthews, 2002. "Social Reciprocity," Middlebury College Working Paper Series 0229, Middlebury College, Department of Economics.
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  7. Casari, Marco & Plott, Charles R., 2003. "Decentralized management of common property resources: experiments with a centuries-old institution," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 217-247, June.
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  9. 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.
  10. Louis Putterman & Christopher M. Anderson, 2003. "Do Non-strategic Sanctions Obey the Law of Demand? The Demand for Punishment in the Voluntary Contribution Mechanism," Working Papers 2003-15, Brown University, Department of Economics.
  11. Jeffrey Carpenter, 2002. "The Demand for Punishment," Middlebury College Working Paper Series 0243, Middlebury College, Department of Economics.
  12. Casari, Marco & Luini, Luigi, 2009. "Cooperation under alternative punishment institutions: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 273-282, August.
  13. Anabela Botelho & Glenn W. Harrison & Lígia Pinto & Elisabet E. Rutstrom, 2005. "Social norms and social choice," NIMA Working Papers 30, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  14. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences With Simple Tests," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 817-869, August.
  15. Stefan Grosse & Louis Putterman & Bettina Rockenbach, 2007. "Monitoring In Teams: A Model and Experiment on the Central Monitor Hypothesis," Working Papers 2007-4, Brown University, Department of Economics.
  16. Matthias Cinyabuguma & Talbot Page & Louis Putterman, 2004. "On Perverse and Second-Order Punishment in Public Goods Experiments with Decentralized Sanctioning," Working Papers 2004-12, Brown University, Department of Economics.
  17. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  18. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics.
  19. Matthias Cinyabuguma & Talbot Page & Louis Putterman, 2006. "Can second-order punishment deter perverse punishment?," Experimental Economics, Springer, vol. 9(3), pages 265-279, September.
  20. Nikiforakis, Nikos, 2008. "Punishment and counter-punishment in public good games: Can we really govern ourselves," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 91-112, February.
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