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Choosing the carrot or the stick? - Endogenous institutional choice in social dilemma situations

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  • Matthias Sutter
  • Stefan Haigner
  • Martin Kocher

Abstract

We analyze an experimental public goods game in which group members can endogenously determine whether they want to supplement a standard voluntary contribution mechanism with the possibility of rewarding or punishing other group members. We find a large and positive effect of endogenous institutional choice on the level of cooperation in comparison to exogenously implemented institutions. This suggests that participation rights enhance cooperation in groups. With endogenous choice, groups typically vote for the reward option, even though punishment is actually more effective in sustaining high levels of cooperation. Our results are evaluated against the predictions of social preference models.

Suggested Citation

  • Matthias Sutter & Stefan Haigner & Martin Kocher, "undated". "Choosing the carrot or the stick? - Endogenous institutional choice in social dilemma situations," Working Papers 2008-07, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2008-07
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    References listed on IDEAS

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    1. Stephan Kroll & Todd L. Cherry & Jason F. Shogren, 2007. "Voting, Punishment, And Public Goods," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 557-570, July.
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    More about this item

    Keywords

    public goods; punishment; reward; endogenous institutional choice; voting; experiment;
    All these keywords.

    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
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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