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Nonmonetary sanctions and rewards in an experimental coordination game

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  • Dugar, Subhasish

Abstract

A growing body of experimental research documents that nonmonetary sanctions and rewards may be important instruments for enforcing efficient behavior. This study contributes to this literature by reporting results from a laboratory experiment. The experiment is designed to test whether nonmonetary sanctions or rewards alone can yield the optimal level of efficiency in a game with Pareto-ranked equilibria. Performance based disapproval and approval ratings, assigned by group members, are used as proxies for nonmonetary sanction and reward, respectively. Although these ratings are costless and payoff neutral, results show that expression of disapproval facilitates coordination on the most efficient equilibrium. In contrast, statement of approval induces subjects to converge towards the most inefficient outcome. We conclude that induced approval and disapproval ratings have asymmetric behavioral effects on coordination.

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  • Dugar, Subhasish, 2010. "Nonmonetary sanctions and rewards in an experimental coordination game," Journal of Economic Behavior & Organization, Elsevier, vol. 73(3), pages 377-386, March.
  • Handle: RePEc:eee:jeborg:v:73:y:2010:i:3:p:377-386
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    Cited by:

    1. Eriksson, Tor & Villeval, Marie Claire, 2012. "Respect and relational contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 286-298.
    2. Gary E. Bolton & Christoph Feldhaus & Axel Ockenfels, 2016. "Social Interaction Promotes Risk Taking in a Stag Hunt Game," German Economic Review, Verein für Socialpolitik, vol. 17(3), pages 409-423, August.
    3. Lowen, Aaron & Schmitt, Pamela, 2013. "Cooperation limitations under a one-time threat of expulsion and punishment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 68-74.
    4. López-Pérez, Raúl & Vorsatz, Marc, 2010. "On approval and disapproval: Theory and experiments," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 527-541, August.
    5. Lu Dong & Maria Montero & Alex Possajennikov, 2015. "Communication, Leadership and Coordination Failure," Discussion Papers 2015-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Thommes, Kirsten & Vyrastekova, Jana & Akkerman, Agnes, 2015. "Behavioral spillovers from freeriding in multilevel interactions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 78-87.
    7. Kene Boun My & Benjamin Ouvrard, 2017. "Nudge and Tax in an Environmental Public Goods Experiment: Does Environmental Sensitivity Matter?," Working Papers of BETA 2017-06, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    8. Adam Zylbersztejn, 2013. "Strategic signaling or emotional sanctioning? An experimental study of ex post communication in a repeated public goods game," Documents de travail du Centre d'Economie de la Sorbonne 13011, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    9. Lumeau, Marianne & Masclet, David & Penard, Thierry, 2015. "Reputation and social (dis)approval in feedback mechanisms: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 127-140.
    10. Adam Zylbersztejn, 2015. "Nonverbal Feedback, Strategic Signaling, and Nonmonetary Sanctioning: New Experimental Evidence from a Public Goods Game," Research in Experimental Economics,in: Replication in Experimental Economics, volume 18, pages 153-181 Emerald Publishing Ltd.
    11. Andreas Leibbrandt & Raúl López-Pérez, 2014. "Different carrots and different sticks: do we reward and punish differently than we approve and disapprove?," Theory and Decision, Springer, vol. 76(1), pages 95-118, January.
    12. de Melo, Gioia & Piaggio, Matías, 2015. "The perils of peer punishment: Evidence from a common pool resource framed field experiment," Ecological Economics, Elsevier, vol. 120(C), pages 376-393.
    13. De Hoop, Thomas & Van Kempen, Luuk & Linssen, Rik & Van Eerdewijk, Anouka, 2010. "Women's Autonomy and Subjective Well-Being in India: How Village Norms Shape the Impact of Self-Help Groups," MPRA Paper 25921, University Library of Munich, Germany.
    14. Peter H. Kriss & Roberto Weber, 2013. "Organizational formation and change: lessons from economic laboratory experiments," Chapters,in: Handbook of Economic Organization, chapter 14 Edward Elgar Publishing.
    15. Fabrice Le Lec & Astrid Matthey & Ondrej Rydval, 2012. "Punishment Fosters Efficiency in the Minimum Effort Coordination Game," Jena Economic Research Papers 2012-030, Friedrich-Schiller-University Jena.
    16. repec:eee:jeborg:v:142:y:2017:i:c:p:64-78 is not listed on IDEAS
    17. Mbiti, Isaac M. & Serra, Danila, 2018. "Health Workers' Behavior, Patient Reporting and Reputational Concerns: Lab-in-the-Field Experimental Evidence from Kenya," IZA Discussion Papers 11352, Institute for the Study of Labor (IZA).
    18. Benjamin Ouvrard & Anne Stenger, 2017. "Nudging with heterogeneity in terms of environmental sensitivity : a public goods experiment in networks," Working Papers of BETA 2017-36, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    19. Adam Zylbersztejn, 2014. "The predominant role of signal precision in experimental beauty contests," Working Papers 1443, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    20. Fabrice Le Lec & Ondrej Rydval & Astrid Matthey, 2014. "Efficiency and Punishment in a Coordination Game: Voluntary Sanctions in the Minimum Effort Game," CERGE-EI Working Papers wp526, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    21. de Melo Gioia & Piaggio Matías, 2015. "The Perils of Peer Punishment: Evidence from a Common Pool Resource Experiment," Working Papers 2015-12, Banco de México.
    22. Steven J. Bosworth, 2017. "The importance of higher-order beliefs to successful coordination," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 237-258, March.
    23. Matthias Greiff, 2013. "Affective Social Ties without the Need to Belong?," Rationality, Markets and Morals, Frankfurt School Verlag, Frankfurt School of Finance & Management, vol. 4(64), May.

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