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The Economics of Altruistic Punishment and the Demise of Cooperation

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Author Info
Martijn Egas () (Institute for Biodiversity and Ecosystem Dynamics, University of Amsterdam)
Arno Riedl () (Faculty of Economics and Econometrics, University of Amsterdam)

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Abstract

Explaining the evolution and maintenance of cooperation among unrelated individuals is one of the fundamental problems in biology and the social sciences. Recent experimental evidence suggests that altruistic punishment is an important mechanism to maintain cooperation among humans. In this paper we explore the boundary conditions for altruistic punishment to maintain cooperation by systematically varying the cost and impact of punishment, using a subject pool which extends beyond the standard student population. We find that the economics of altruistic punishment lead to the demise of cooperation when punishment is relatively expensive and/or has low impact. Our results indicate that the 'decision to punish' comes from an amalgam of emotional response and cognitive cost-benefit analysis. Additionally, earnings are lowest when punishment promotes cooperation, suggesting that the scope for altruistic punishment as a means to maintain cooperation is limited.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-065/1.

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Date of creation: 17 Jun 2005
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Handle: RePEc:dgr:uvatin:20050065

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Related research
Keywords: altrusitic puishment; collective action; public goods; internet experiment;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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  1. Ernst Fehr & Simon Gaechter, 2003. "Altruistic Punishment in Humans," Microeconomics 0305006, EconWPA. [Downloadable!]
  2. Michael Kosfeld & Arno Riedl, 2004. "The Design of (De)centralized Punishment Institutions for Sustaining Co-operation," Tinbergen Institute Discussion Papers 04-025/1, Tinbergen Institute. [Downloadable!]
  3. Ernst Fehr & Simon Gachter, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September. [Downloadable!] (restricted)
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  4. David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism," American Economic Review, American Economic Association, vol. 93(1), pages 366-380, March. [Downloadable!]
    Other versions:
  5. Ernst Fehr & Urs Fischbacher, 2004. "The nature of human altruism," Experimental 0402003, EconWPA. [Downloadable!]
  6. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers iewwp004, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  7. Ronald Bosman & Frans van Winden, 2002. "Emotional Hazard in a Power-to-take Experiment," Economic Journal, Royal Economic Society, vol. 112(476), pages 147-169, January. [Downloadable!] (restricted)
  8. Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Microeconomics 0305007, EconWPA. [Downloadable!]
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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.)

  1. Astrid Hopfensitz & Ernesto Reuben, 2005. "The Importance of Emotions for the Effectiveness of Social Punishment," Discussion Papers 06-09, University of Copenhagen. Department of Economics, revised Mar 2006. [Downloadable!]
    Other versions:
  2. Asher, Sam & Casaburi, Lorenzo & Nikolov, Plamen & Ye, Maoliang, 2009. "One Step at a Time: Do Threshold Patterns Matter in Public Good Provision?," Economics Discussion Papers 2009-5, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  3. Ernesto Reuben & Arno Riedl, 2007. "Public Goods Provision and Sanctioning in Privileged Groups," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Jana Vyrastekova & Daan van Soest, 2008. "On the (in)effectiveness of rewards in sustaining cooperation," Experimental Economics, Springer, vol. 11(1), pages 53-65, March. [Downloadable!] (restricted)
  5. Simon Gaechter & Benedikt Herrmann, 2006. "The limits of self-governance in the presence of spite: Experimental evidence from urban and rural Russia," Discussion Papers 2006-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
    Other versions:
  6. David Masclet & Marie-Claire Villeval, 2008. "Punishment, inequality, and welfare: a public good experiment," Social Choice and Welfare, Springer, vol. 31(3), pages 475-502, October. [Downloadable!] (restricted)
    Other versions:
  7. Simon Gaechter & Benedikt Herrmann, 2007. "The limits of self-governance when cooperators get punished: Experimental evidence from urban and rural Russia," Discussion Papers 2007-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  8. Stefania Ottone & Ferruccio Ponzano & Luca Zarri, 2008. "Moral Sentiments and Material Interests behind Altruistic Third-Party Punishment," Working Papers 48, Università di Verona, Dipartimento di Scienze economiche. [Downloadable!]
  9. Visser, Martine & Burns, Justine, 2006. "Bridging the Great Divide in South Africa: Inequality and Punishment in the Provision of Public Goods," Working Papers in Economics 219, Göteborg University, Department of Economics. [Downloadable!]
  10. Kosfeld, Michael & Okada, Akira & Riedl, Arno, 2006. "Institution Formation in Public Goods Games," Research Memoranda 029, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
    Other versions:
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