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Coordinated Punishment and the Evolution of Cooperation

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  • GONZALO OLCINA
  • VICENTE CALABUIG

Abstract

In this paper, we analyze a team trust game with coordinated punishment of the allocator by investors and where there is also a final stage of peer punishment. We study the effect of punishment on the reward and the investment decisions, when the effectiveness and cost of coordinated punishment depend on the number of investors adhering to this activity. The interaction takes place in an overlapping-generations model with heterogeneous preferences and incomplete information. The only long-run outcomes of the dynamics are either a fully cooperative culture (FCC) with high levels of trust and cooperation and fair returns or a non-cooperative culture with no cooperation at all. The basin of attraction of the FCC is larger; the higher the institutional capacity of coordinated punishment, the higher the level of peer pressure and the smaller the individual cost of coordinated punishment.

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  • Gonzalo Olcina & Vicente Calabuig, 2015. "Coordinated Punishment and the Evolution of Cooperation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(2), pages 147-173, April.
    • Handle: RePEc:bla:jpbect:v:17:y:2015:i:2:p:147-173
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    File URL: http://hdl.handle.net/10.1111/jpet.12090
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    References listed on IDEAS

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    Cited by:

    1. Vicente Calabuig & Enrique Fatas & Gonzalo Olcina & Ismael Rodriguez-Lara, 2013. "Carry a big stick, or no stick at all An experimental analysis of trust and capacity of punishment," Discussion Papers in Economic Behaviour 0413, University of Valencia, ERI-CES.
    2. Calabuig, Vicente & Fatas, Enrique & Olcina, Gonzalo & Rodriguez-Lara, Ismael, 2016. "Carry a big stick, or no stick at all," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 153-171.

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