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Getting Punnishment Right: Do Costly Monitoring or Redustributive Punishment Help?

We introduce new treatments of a voluntary contribution mechanism with opportunities to punish, to see how contributions and punishments change when (a) each dollar lost in punishment must be awarded to another team member and/or when (b) obtaining information on individuals’ contributions is a costly choice. Conjectures that tying punishments to rewards might reduce punishment of high contributors (perverse punishment) or increase overall punishing are not completely born out, but innovation (a) nonetheless succeeds in making the net punishment of high contributors much less common because they receive enough rewards to offset punishment. A surprise finding is that innovation (b) also decreases the incidence of misdirected punishment, since high contributors do more monitoring than low ones while low contributors do most of the perverse punishing. Both innovations raise both contributions and earnings relative to the familiar VCM-with-punishment treatment.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2008-1.

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Date of creation: 2008
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Handle: RePEc:bro:econwp:2008-1
Contact details of provider: Postal: Department of Economics, Brown University, Providence, RI 02912

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  1. Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
  2. Louis Putterman & Christopher M. Anderson, 2003. "Do Non-strategic Sanctions Obey the Law of Demand? The Demand for Punishment in the Voluntary Contribution Mechanism," Working Papers 2003-15, Brown University, Department of Economics.
  3. Sausgruber, Rupert & Tyran, Jean-Robert, 2007. "Pure redistribution and the provision of public goods," Economics Letters, Elsevier, vol. 95(3), pages 334-338, June.
  4. Stefan Grosse & Louis Putterman & Bettina Rockenbach, 2007. "Monitoring In Teams: A Model and Experiment on the Central Monitor Hypothesis," Working Papers 2007-4, Brown University, Department of Economics.
  5. Jeffrey Carpenter, 2002. "The Demand for Punishment," Middlebury College Working Paper Series 0243, Middlebury College, Department of Economics.
  6. Nikiforakis, Nikos, 2008. "Punishment and counter-punishment in public good games: Can we really govern ourselves," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 91-112, February.
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  11. Josef Falkinger, 2000. "A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence," American Economic Review, American Economic Association, vol. 90(1), pages 247-264, March.
  12. Matthias Cinyabuguma & Talbot Page & Louis Putterman, 2004. "On Perverse and Second-Order Punishment in Public Goods Experiments with Decentralized Sanctioning," Working Papers 2004-12, Brown University, Department of Economics.
  13. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  14. Jeffrey Carpenter & Peter Hans Matthews, 2004. "Social Reciprocity," Middlebury College Working Paper Series 0229r, Middlebury College, Department of Economics.
  15. Astrid Hopfensitz & Ernesto Reuben, 2005. "The Importance of Emotions for the Effectiveness of Social Punishment," Tinbergen Institute Discussion Papers 05-075/1, Tinbergen Institute, revised 28 Mar 2006.
  16. Anabela Botelho & Glenn W. Harrison & Lígia Costa Pinto & Elisabet E. Rutstrom, 2005. "Social norms and social choice," NIMA Working Papers 30, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  17. Astrid Hopfensitz & Ernesto Reuben, 2005. "The Importance of Emotions for the Effectiveness of Social Punishment," Tinbergen Institute Discussion Papers 05-075/1, Tinbergen Institute, revised 28 Mar 2006.
  18. Martin Sefton & Robert Shupp & James M. Walker, 2007. "The Effect Of Rewards And Sanctions In Provision Of Public Goods," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 671-690, October.
  19. Nikos Nikiforakis, 2004. "Punishment and Counter-punishment in Public Goods Games: Can we still govern ourselves?," Royal Holloway, University of London: Discussion Papers in Economics 04/05, Department of Economics, Royal Holloway University of London, revised Apr 2004.
  20. Astrid Hopfensitz & Ernesto Reuben, 2009. "The Importance of Emotions for the Effectiveness of Social Punishment," Economic Journal, Royal Economic Society, vol. 119(540), pages 1534-1559, October.
  21. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics.
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