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Punishment in a Regulatory Setting: Experimental Evidence from the VCM

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  • Anderson, Lisa R
  • Stafford, Sarah L

Abstract

To analyze the effectiveness of punishment in inducing regulatory compliance, we modify a standard public goods experiment to include a financial penalty for free riding. The design allows us to vary both punishment probability and severity. We introduce the punishment mechanism in both a one-time and a repeated treatment and find that compliance (contributing to the public good) is increasing in expected punishment cost in both treatments. We also find that punishment severity has a larger effect on behavior than punishment probability. In the repeated treatment, we find that past punishment has a negative rather than positive effect on compliance. Copyright 2003 by Kluwer Academic Publishers

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  • Anderson, Lisa R & Stafford, Sarah L, 2003. "Punishment in a Regulatory Setting: Experimental Evidence from the VCM," Journal of Regulatory Economics, Springer, vol. 24(1), pages 91-110, July.
    • Handle: RePEc:kap:regeco:v:24:y:2003:i:1:p:91-110
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