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Punishment and Counter-punishment in Public Goods Games: Can we still govern ourselves?

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Abstract

Recent public goods experiments have shown that free riding can be curtailed through mutual monitoring and sanctioning between members of a group. However, often we can not allow for punishment and exclude the possibility of counter-punishment occurring. We design a public goods experiment, where we allow for both punishment and counter-punishment. We find that in both partner and stranger treatments cooperation declines over time. The reason is that people are less willing to punish under the threat of counter-punishment. Participants squander their endowment in costly confrontations leading to a relative payoff loss, in comparison to a treatment without punishments.

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Bibliographic Info

Paper provided by Department of Economics, Royal Holloway University of London in its series Royal Holloway, University of London: Discussion Papers in Economics with number 04/05.

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Length: 34 pages
Date of creation: Apr 2004
Date of revision: Apr 2004
Handle: RePEc:hol:holodi:0405

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Keywords: public goods; punishment; counter-punishment; mutual monitoring; free-riding; experiments;

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  1. R. Isaac & James Walker & Susan Thomas, 1984. "Divergent evidence on free riding: An experimental examination of possible explanations," Public Choice, Springer, vol. 43(2), pages 113-149, January.
  2. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence," Econometrica, Econometric Society, vol. 65(4), pages 833-860, July.
  3. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  4. Colin F. Camerer & Richard H. Thaler, 1995. "Anomalies: Ultimatums, Dictators and Manners," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 209-219, Spring.
  5. David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2001. "Monetary and Non-Monetary Punishment in the Voluntary Contributions Mechanism," Post-Print halshs-00151423, HAL.
  6. Carpenter, Jeffrey P., 2007. "The demand for punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 522-542, April.
  7. Ernst Fehr & Simon Gaechter, 2003. "Altruistic Punishment in Humans," Microeconomics 0305006, EconWPA.
  8. 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.
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