IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v20y2020i2p22n10.html
   My bibliography  Save this article

Endogenous Authority and Enforcement in Public Goods Games

Author

Listed:
  • Lim Wooyoung

    () (Department of Economics, Hong Kong University of Science and Technology, LSK Business School Building, Room 6080, Kowloon, Hong Kong)

  • Zhang Jipeng

    () (Institute of Economics and Management, Southwestern University of Finance and Economics, Chengdu610074, China)

Abstract

This paper investigates theoretically and experimentally the social benefits and cost to have an endogenous punishment-enforcing authority in public goods game. An authority is chosen among members of a society via an imperfectly discriminating contest prior to a public goods game. Once chosen the authority has a large degree of discretion to inflict punishment. Our theoretical result shows that an efficiency gain from having the endogenous authority always comes with a social cost from competing for being the authority. The larger the society is, however, the bigger the efficiency gain and the smaller the rent dissipation. The completely efficient outcome can be approximated as the size of society tends to infinity. The experimental results confirm that the presence of endogenous authority for a given group size increases the public goods contributions and the efficiency gain is significantly bigger in a larger group.

Suggested Citation

  • Lim Wooyoung & Zhang Jipeng, 2020. "Endogenous Authority and Enforcement in Public Goods Games," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-22, June.
  • Handle: RePEc:bpj:bejtec:v:20:y:2020:i:2:p:22:n:10
    DOI: 10.1515/bejte-2019-0057
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejte-2019-0057
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Levine, David K. & Palfrey, Thomas R., 2007. "The Paradox of Voter Participation? A Laboratory Study," American Political Science Review, Cambridge University Press, vol. 101(1), pages 143-158, February.
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. 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.
    4. 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.
    5. Josef Falkinger, 2000. "A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence," American Economic Review, American Economic Association, vol. 90(1), pages 247-264, March.
    6. Angela A. Hung & Charles R. Plott, 2001. "Information Cascades: Replication and an Extension to Majority Rule and Conformity-Rewarding Institutions," American Economic Review, American Economic Association, vol. 91(5), pages 1508-1520, December.
    7. John Morgan, 2000. "Financing Public Goods by Means of Lotteries," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 761-784.
    8. Hiroki Ozono & Nobuhito Jin & Motoki Watabe & Kazumi Shimizu, 2016. "Solving the second-order free rider problem in a public goods game: An experiment using a leader support system," Working Papers 1604, Waseda University, Faculty of Political Science and Economics.
    9. Z. Spindler, 1990. "Constitutional design for a rent-seeking society: Voting rule choice," Constitutional Political Economy, Springer, vol. 1(3), pages 73-82, September.
    10. R. Mark Isaac & James M. Walker, 1988. "Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 179-199.
    11. 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.
    12. Fudenberg, Drew & Pathak, Parag A., 2010. "Unobserved punishment supports cooperation," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 78-86, February.
    13. Nikiforakis, Nikos, 2008. "Punishment and counter-punishment in public good games: Can we really govern ourselves," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 91-112, February.
    14. Laurent Denant-Boemont & David Masclet & Charles Noussair, 2007. "Punishment, counterpunishment and sanction enforcement in a social dilemma experiment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 145-167, October.
    15. 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.
    16. Carpenter, Jeffrey P., 2007. "The demand for punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 522-542, April.
    17. Ertan, Arhan & Page, Talbot & Putterman, Louis, 2009. "Who to punish? Individual decisions and majority rule in mitigating the free rider problem," European Economic Review, Elsevier, vol. 53(5), pages 495-511, July.
    18. Ernst Fehr & Tony Williams, 2017. "Social norms, endogenous sorting and the culture of cooperation," ECON - Working Papers 267, Department of Economics - University of Zurich, revised Apr 2018.
    19. Chen, Yan & Plott, Charles R., 1996. "The Groves-Ledyard mechanism: An experimental study of institutional design," Journal of Public Economics, Elsevier, vol. 59(3), pages 335-364, March.
    20. Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-1320, September.
    21. Andreoni, James & Gee, Laura K., 2012. "Gun for hire: Delegated enforcement and peer punishment in public goods provision," Journal of Public Economics, Elsevier, vol. 96(11), pages 1036-1046.
    22. Ostrom, Elinor & Walker, James & Gardner, Roy, 1992. "Covenants with and without a Sword: Self-Governance Is Possible," American Political Science Review, Cambridge University Press, vol. 86(2), pages 404-417, June.
    23. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    endogenous authority; punishment; public goods; group size;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:20:y:2020:i:2:p:22:n:10. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.