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Group Size, Coordination, and the Effectiveness of the Punishment Mechanism in the VCM: An Experimental Investigation

Author

Listed:
  • Bin Xu

    () (Public Administration College, Zhejiang Gongshang University and Experimental Social Science Laboratory, Zhejiang University.)

  • Bram Cadsby

    () (Department of Economics, University of Guelph.)

  • Liangcong Fan

    () (College of Public Administration, Zhejiang University.)

  • Fei Song

    () (Ted Rogers School of Management, Ryerson University.)

Abstract

In this study, we examine the effectiveness of the individual-punishment mechanism in larger groups, comparing groups of four to groups of 40 participants. We find that the individual punishment mechanism is remarkably robust when the MPCR is held constant despite the coordination problems inherent in an institution relying on decentralized individual punishment decisions in the context of a larger group. This reflects increased per-capita expenditures on punishment that offset the greater coordination difficulties in the larger group. However, if the marginal group return stays constant, resulting in an MPCR that shrinks with group size, no such offset occurs and punishment loses much but not all of its effectiveness at encouraging voluntary contributions to a public good.

Suggested Citation

  • Bin Xu & Bram Cadsby & Liangcong Fan & Fei Song, 2011. "Group Size, Coordination, and the Effectiveness of the Punishment Mechanism in the VCM: An Experimental Investigation," Working Papers 1110, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2011-10.
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    File URL: http://www.uoguelph.ca/economics/sites/uoguelph.ca.economics/files/2011-10.pdf
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    References listed on IDEAS

    as
    1. Simon Gachter & Ernst Fehr, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September.
    2. David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism," American Economic Review, American Economic Association, vol. 93(1), pages 366-380, March.
    3. Carpenter, Jeffrey P., 2007. "Punishing free-riders: How group size affects mutual monitoring and the provision of public goods," Games and Economic Behavior, Elsevier, vol. 60(1), pages 31-51, July.
    4. Marco Casari, 2005. "On the Design of Peer Punishment Experiments," Experimental Economics, Springer;Economic Science Association, vol. 8(2), pages 107-115, June.
    5. Bochet, Olivier & Page, Talbot & Putterman, Louis, 2006. "Communication and punishment in voluntary contribution experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 11-26, May.
    6. James Andreoni & William Harbaugh & Lise Vesterlund, 2003. "The Carrot or the Stick: Rewards, Punishments, and Cooperation," American Economic Review, American Economic Association, vol. 93(3), pages 893-902, June.
    7. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, vol. 54(1), pages 1-36, May.
    8. Carpenter, Jeffrey P., 2007. "The demand for punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 522-542, April.
    9. Anderson, Christopher M. & Putterman, Louis, 2006. "Do non-strategic sanctions obey the law of demand? The demand for punishment in the voluntary contribution mechanism," Games and Economic Behavior, Elsevier, vol. 54(1), pages 1-24, January.
    10. Casari, Marco & Luini, Luigi, 2009. "Cooperation under alternative punishment institutions: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 273-282, August.
    11. repec:cup:apsrev:v:86:y:1992:i:02:p:404-417_08 is not listed on IDEAS
    12. Nikos Nikiforakis, 2010. "Experimental Economics," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 337-345.
    13. Rand, David Gertler & Dreber, Anna & Fudenberg, Drew & Ellingson, Tore & Nowak, Martin A., 2009. "Positive Interactions Promote Public Cooperation," Scholarly Articles 3804483, Harvard University Department of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Experiment; Public Good; Punishment; Large Groups;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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