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Firing the right bullets: Exploring the effectiveness of the hired-gun mechanism in the provision of public goods

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  • Liu, Jia
  • Riyanto, Yohanes E.
  • Zhang, Ruike

Abstract

We explore the robustness of the “hired-gun” mechanism proposed by Andreoni and Gee (2012)—a centralized punishment mechanism to promote the collective provision of public goods. In order to avoid the race to the bottom, the hired-gun mechanism relies on the use of the unilateral and tie punishment imposed on the lowest contributor(s). We examine the effectiveness of the hired-gun mechanism under varying sizes of the unilateral and tie punishment by theoretically deriving and experimentally testing a range of punishment parameters that would lead to full contribution. We show that, to some extent, the effectiveness of the mechanism depends on the size of both types of punishments. In particular, the lack of unilateral punishment renders the mechanism less effective.

Suggested Citation

  • Liu, Jia & Riyanto, Yohanes E. & Zhang, Ruike, 2020. "Firing the right bullets: Exploring the effectiveness of the hired-gun mechanism in the provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 222-243.
    • Handle: RePEc:eee:jeborg:v:170:y:2020:i:c:p:222-243
    DOI: 10.1016/j.jebo.2019.12.007
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    1. Yuzhen Li & Jun Luo & He Niu & Hang Ye, 2023. "When punishers might be loved: fourth-party choices and third-party punishment in a delegation game," Theory and Decision, Springer, vol. 94(3), pages 423-465, April.

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    More about this item

    Keywords

    Public goods provision; Hired-gun mechanism; Unilateral punishment; Tie punishment; Lab experiment;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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