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Group Size, Coordination, and the Effectiveness of the Punishment Mechanism in the VCM: An Experimental Investigation

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  • Bin Xu

    ()
    (Public Administration College, Zhejiang Gongshang University and Experimental Social Science Laboratory, Zhejiang University.)

  • Bram Cadsby

    ()
    (Department of Economics, University of Guelph.)

  • Liangcong Fan

    ()
    (College of Public Administration, Zhejiang University.)

  • Fei Song

    ()
    (Ted Rogers School of Management, Ryerson University.)

Abstract

In this study, we examine the effectiveness of the individual-punishment mechanism in larger groups, comparing groups of four to groups of 40 participants. We find that the individual punishment mechanism is remarkably robust when the MPCR is held constant despite the coordination problems inherent in an institution relying on decentralized individual punishment decisions in the context of a larger group. This reflects increased per-capita expenditures on punishment that offset the greater coordination difficulties in the larger group. However, if the marginal group return stays constant, resulting in an MPCR that shrinks with group size, no such offset occurs and punishment loses much but not all of its effectiveness at encouraging voluntary contributions to a public good.

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Bibliographic Info

Paper provided by University of Guelph, Department of Economics and Finance in its series Working Papers with number 1110.

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Length: 25 pages
Date of creation: 2011
Date of revision:
Publication status: Published in Games (2013) Vol. 4, 1, 89-105.
Handle: RePEc:gue:guelph:2011-10.

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Keywords: Experiment; Public Good; Punishment; Large Groups;

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  1. James Andreoni & William Harbaugh & Lise Vesterlund, 2003. "The Carrot or the Stick: Rewards, Punishments, and Cooperation," American Economic Review, American Economic Association, vol. 93(3), pages 893-902, June.
  2. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, vol. 54(1), pages 1-36, May.
  3. Marco Casari, 2005. "On the Design of Peer Punishment Experiments," Experimental Economics, Springer, vol. 8(2), pages 107-115, June.
  4. Bochet, Olivier & Page, Talbot & Putterman, Louis, 2006. "Communication and punishment in voluntary contribution experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 11-26, May.
  5. Ernst Fehr & Simon Gaechter, . "Cooperation and Punishment in Public Goods Experiments," IEW - Working Papers 010, Institute for Empirical Research in Economics - University of Zurich.
  6. 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.
  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. 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.
  9. 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.
  10. Jeffrey Carpenter, 2002. "The Demand for Punishment," Middlebury College Working Paper Series 0243, Middlebury College, Department of Economics.
  11. 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.
  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.
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