The Design of (De)centralized Punishment Institutions for Sustaining Co-operation

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The Design of (De)centralized Punishment Institutions for Sustaining Co-operation

Author Info

Michael Kosfeld () (University of Zürich)
Arno Riedl () (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

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Abstract

In this paper we discuss experimental evidence for two different institutional approaches to a possible resolution of the fundamental conflict between social welfare maximization and individual utility maximization. The basic workhorse for modelling this conflict is the voluntary contribution of a group of individuals to a public good. The common element of the investigated mechanisms is that both are based on the imposition of sanctions for free-riding behavior. The main difference between them concerns the question of “who punishes”. In the first approach, punishment is executed by the group members themselves individually, i.e., punishment is decentral in nature. The second approach is based on the idea that individuals may be willing to delegate the punishment to a central, external authority. The key questions to answered are, whether individuals are willing and able to implement such punishment institution, how successfully implemented institutions look like, and whether they can increase the cooperation level of individuals in the group.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-025/1.

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Date of creation: 27 Feb 2004
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Handle: RePEc:dgr:uvatin:20040025

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Find related papers by JEL classification:
D62 - Microeconomics - - Welfare Economics - - - Externalities
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-04-25 (All new papers)
NEP-COM-2004-04-25 (Industrial Competition)
NEP-EXP-2004-04-25 (Experimental Economics)
NEP-REG-2004-04-25 (Regulation)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Other versions:
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Other versions:
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Other versions:
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Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Josef Falkinger, 2004. "Noncooperative Support of Public Norm Enforcement in Large Societies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Friederike Mengel & Veronika Grimm, 2007. "Group Selection With Imperfect Separation - An Experiment," Working Papers. Serie AD 2007-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
Martijn Egas & Arno Riedl, 2005. "The Economics of Altruistic Punishment and the Demise of Cooperation," IZA Discussion Papers 1646, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Martijn Egas & Arno Riedl, 2005. "The Economics of Altruistic Punishment and the Demise of Cooperation," Artefactual Field Experiments 0036, The Field Experiments Website. [Downloadable!]
- Martijn Egas & Arno Riedl, 2005. "The Economics of Altruistic Punishment and the Demise of Cooperation," Tinbergen Institute Discussion Papers 05-065/1, Tinbergen Institute. [Downloadable!]
Friederike Mengel & Veronika Grimm, 2007. "Cooperation In Viscous Populations - Experimental Evidence," Working Papers. Serie AD 2007-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
Other versions:
- Grimm, Veronika & Mengel, Friederike, 2009. "Cooperation in viscous populations--Experimental evidence," Games and Economic Behavior, Elsevier, vol. 66(1), pages 202-220, May. [Downloadable!] (restricted)
Francesca Bortolami & Luigi Mittone, 2009. "Does Participating in a Collective Decision Affect the Levels of Contributions Provided? An Experimental Investigation," CEEL Working Papers 0902, Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia. [Downloadable!]
Casari, Marco & Luini, Luigi, 2005. "Group Cooperation Under Alternative Peer Punishment Technologies: An Experiment," Purdue University Economics Working Papers 1176, Purdue University, Department of Economics. [Downloadable!]
Other versions:
- Marco Casari & Luigi Luini, 2005. "Group Cooperation Under Alternative Peer Punishment Technologies: An Experiment," Labsi Experimental Economics Laboratory University of Siena 002, University of Siena. [Downloadable!]

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