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State or nature? Endogenous formal versus informal sanctions in the voluntary provision of public goods

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  • Kenju Kamei
  • Louis Putterman

    ()

  • Jean-Robert Tyran

Abstract

We investigate the endogenous formation of sanctioning institutions supposed to improve efficiency in the voluntary provision of public goods. Our paper parallels Markussen et al. (Rev Econ Stud 81:301–324, 2014 ) in that our experimental subjects vote over formal versus informal sanctions, but it goes beyond that paper by endogenizing the formal sanction scheme. We find that self-determined formal sanctions schemes are popular and efficient when they carry no up-front cost, but as in Markussen et al. informal sanctions are more popular and efficient than formal sanctions when adopting the latter entails such a cost. Practice improves the performance of sanction schemes: they become more targeted and deterrent with learning. Voters’ characteristics, including their tendency to engage in perverse informal sanctioning, help to predict individual voting. Copyright Economic Science Association 2015

Suggested Citation

  • Kenju Kamei & Louis Putterman & Jean-Robert Tyran, 2015. "State or nature? Endogenous formal versus informal sanctions in the voluntary provision of public goods," Experimental Economics, Springer;Economic Science Association, vol. 18(1), pages 38-65, March.
  • Handle: RePEc:kap:expeco:v:18:y:2015:i:1:p:38-65
    DOI: 10.1007/s10683-014-9405-0
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    References listed on IDEAS

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    Keywords

    Sanction; Social dilemma; Public goods; Voluntary contribution mechanism; Punishment; Experiment; C92; C91; D03; D71; H41;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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