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Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation

Author

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  • Bin Xu

    (Experimental Social Science Laboratory, Zhejiang University and Public Administration College, Zhejiang Gongshang University, Hangzhou, China
    Bin Xu is the holder of the grant from the Social Science Experimental Center of Zhejiang University that funded this project. All authors contributed equally to the study.)

  • C. Bram Cadsby

    (Department of Economics and Finance, University of Guelph, Guelph, ON, N1G 2W1, Canada)

  • Liangcong Fan

    (Guanghua Law School, Zhejiang University, Hangzhou, China)

  • Fei Song

    (Ted Rogers School of Management, Ryerson University, Toronto, ON, M5G 2C5, Canada)

Abstract

We examine the effectiveness of the individual-punishment mechanism in larger groups, comparing groups of four to groups of 40 participants. We find that the individual punishment mechanism is remarkably robust when the marginal per capita return (MPCR), i.e. the return to each participant from each dollar that is contributed, is held constant. Moreover, the efficiency gains from the punishment mechanism are significantly higher in the 40-participant than in the four-participant treatment. This is true despite the coordination problems inherent in an institution relying on decentralized individual punishment decisions in the context of a larger group. It reflects increased per capita expenditures on punishment that offset the greater coordination difficulties in the larger group. However, if the marginal group return (MGR), i.e. the return to the entire group of participants, stays constant, resulting in an MPCR that shrinks with group size, no such offset occurs and punishment loses much but not all of its effectiveness at encouraging voluntary contributions to a public good. Efficiency is not significantly different from the small-group treatment.

Suggested Citation

  • Bin Xu & C. Bram Cadsby & Liangcong Fan & Fei Song, 2013. "Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation," Games, MDPI, vol. 4(1), pages 1-17, February.
    • Handle: RePEc:gam:jgames:v:4:y:2013:i:1:p:89-105:d:23658
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    References listed on IDEAS

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    2. Mantilla, César & Zhou, Ling & Wang, Charlotte & Yang, Donghui & Shen, Suping & Seabright, Paul, 2021. "Favoring your in-group can harm both them and you: Ethnicity and public goods provision in China," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 211-233.
    3. Duffy, John & Xie, Huan, 2016. "Group size and cooperation among strangers," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 55-74.
    4. Aurélie Bonein & Cécile Bazart, 2017. "The Strength of the Symbol: Are we Willing to Punish Evaders ?," Working Papers 17-02, LAMETA, Universtiy of Montpellier.
    5. Goeschl, Timo & Kettner, Sara Elisa & Lohse, Johannes & Schwieren, Christiane, 2020. "How much can we learn about voluntary climate action from behavior in public goods games?," Ecological Economics, Elsevier, vol. 171(C).
    6. Hiroki Ozono & Yoshio Kamijo & Kazumi Shimizu, 2019. "The function of peer reward and punishment in localized society: We can only “Think locally, Act locally”," Working Papers 1912, Waseda University, Faculty of Political Science and Economics.
    7. Bao, Te & Hennequin, Myrna & Hommes, Cars & Massaro, Domenico, 2020. "Coordination on bubbles in large-group asset pricing experiments," Journal of Economic Dynamics and Control, Elsevier, vol. 110(C).
    8. Richard Benjamin, 2016. "Tacit Collusion in Electricity Markets with Uncertain Demand," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(1), pages 69-93, February.

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