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The Effect of Rewards and Sanctions in Provision of Public Goods

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Martin Sefton & Robert S. Shupp & James Walker, 2005. "The Effect of Rewards and Sanctions in Provision of Public Goods," Working Papers 200504, Ball State University, Department of Economics, revised Feb 2005.
  • Handle: RePEc:bsu:wpaper:200504
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    References listed on IDEAS

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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