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The Economics of Altruistic Punishment and the Demise of Cooperation

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Author Info

  • Egas, Martijn

    ()
    (University of Amsterdam)

  • Riedl, Arno

    ()
    (Maastricht University)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1646.

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Length: 25 pages
Date of creation: Jul 2005
Date of revision:
Publication status: published as "The economics of altruistic punishment and the maintenance of cooperation" in: Proceedings of the Royal Society B -Biological Sciences, 2008, 275 (1637), 871-878
Handle: RePEc:iza:izadps:dp1646

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Keywords: internet experiment; altruistic punishment; collective action; public goods;

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  1. 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.
  2. Ernst Fehr & Simon Gaechter, . "Cooperation and Punishment in Public Goods Experiments," IEW - Working Papers 010, Institute for Empirical Research in Economics - University of Zurich.
  3. M.A. Nowak & K. Sigmund, 1998. "Evolution of Indirect Reciprocity by Image Scoring/ The Dynamics of Indirect Reciprocity," Working Papers ir98040, International Institute for Applied Systems Analysis.
  4. Ernst Fehr & Simon Gaechter, 2003. "Altruistic Punishment in Humans," Microeconomics, EconWPA 0305006, EconWPA.
  5. 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.
  6. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  7. Ronald Bosman & Frans van Winden, 2002. "Emotional Hazard in a Power-to-take Experiment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(476), pages 147-169, January.
  8. Nowak, Martin & Sasaki, Akira & Fudenberg, Drew & Taylor, Christine, 2004. "Emergence of Cooperation and Evolutionary Stability in Finite Populations," Scholarly Articles 3196331, Harvard University Department of Economics.
  9. Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Microeconomics, EconWPA 0305007, EconWPA.
  10. Ernst Fehr & Urs Fischbacher, 2004. "The nature of human altruism," Experimental, EconWPA 0402003, EconWPA.
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