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Risky Punishment and Reward in the Prisoner’s Dilemma

  • Peter Duersch

    ()

    (University of Heidelberg, Department of Economics)

  • Maros Servátka

    (University of Canterbury, Department of Economics)

We conduct a prisoner’s dilemma experiment with a punishment/reward stage, where punishments and rewards are risky. This is compared with a risk free treatment. We find that subjects do not change their behavior in the face of risky outcomes. Additionally, we measure risk attitude and the emotions of subjects. While we find a strong influence of emotions, individual risk aversion has no effect on the decision to punish or reward. This is good news for lab experiments who abstract from risky outcomes. From the perspective of social preferences, our results provide evidence for risk neutral inclusion of other player’s payoffs in the decisionmaker’s utility function.

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File URL: http://www.uni-heidelberg.de/md/awi/forschung/dp451.pdf
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Paper provided by University of Heidelberg, Department of Economics in its series Working Papers with number 0451.

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Length: 20 pages
Date of creation: Sep 2007
Date of revision: Sep 2007
Handle: RePEc:awi:wpaper:0451
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