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The Effect of Rewards and Sanctions in Provision of Public Goods

  • Martin Sefton

    ()

    (University of Nottingham, United Kingdom)

  • Robert S. Shupp

    ()

    (Department of Economics, Ball State University)

  • James Walker

    ()

    (Department of Economics, Indiana University, Bloomington, IN)

A growing number of field and experimental studies in social dilemma settings focus on the institutional arrangements by which individuals are able to solve collective action problems. Important in this research is the role of reciprocity and institutions that facilitate cooperation via opportunities for monitoring, sanctioning, and rewarding others. This study contrasts sanction and reward institutions in the context of a public goods experiment. Sanctions represent a net loss, a cost to both the participant imposing the sanction and the individual receiving the sanction. Rewards represent a zero sum transfer from participants giving rewards to those receiving rewards. These institutions are compared in regard to their impact on overall levels of cooperation and economic efficiency.

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File URL: http://econfac.iweb.bsu.edu/research/workingpapers/bsuecwp200504sefton.pdf
File Function: First version, 2005
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Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200504.

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Length: 39 pages
Date of creation: Feb 2005
Date of revision: Feb 2005
Handle: RePEc:bsu:wpaper:200504
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Web page: http://www.bsu.edu/econ

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