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Mixing the carrots with the sticks: third party punishment and reward

Author

Listed:
  • Nikos Nikiforakis

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - Université de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Helen Mitchell

    (Department of Foreign Affairs and Trade - Australian Government Department of Foreign Affairs and Trade)

Abstract

While the opportunity to punish selfish and reward generous behavior coexist in many instances in daily life, in most laboratory studies, the demand for punishment and reward are studied separately from one another. This paper presents the results from an experiment measuring the demand for reward and punishment by 'unaffected' third parties, separately and jointly. We find that the demand for costly punishment is substantially lower when individuals are also given the ability to reward. Similarly, the demand for costly reward is lower when individuals can also punish. The evidence indicates the reason for this is that costly punishment and reward are not only used to alter the material payoff of others as assumed by recent economic models, but also as a signal of disapproval and approval of others' actions, respectively. When the opportunity exists, subjects often choose to withhold reward as a form of costless punishment, and to withhold punishment as a form of costless reward. We conclude that restricting the available options to punishing (rewarding) only, may lead to an increase in the demand for costly punishment (reward).
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Nikos Nikiforakis & Helen Mitchell, 2014. "Mixing the carrots with the sticks: third party punishment and reward," Post-Print halshs-01948069, HAL.
    • Handle: RePEc:hal:journl:halshs-01948069
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    Cited by:

    1. Kriss, Peter H. & Weber, Roberto A. & Xiao, Erte, 2016. "Turning a blind eye, but not the other cheek: On the robustness of costly punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 159-177.
    2. Argenton, Cédric & Potters, Jan & Yang, Yadi, 2023. "Receiving credit: On delegation and responsibility," European Economic Review, Elsevier, vol. 158(C).
    3. Fehr, Dietmar & Sutter, Matthias, 2019. "Gossip and the efficiency of interactions," Games and Economic Behavior, Elsevier, vol. 113(C), pages 448-460.
    4. Bicskei, Marianna & Lankau, Matthias & Bizer, Kilian, 2016. "Negative reciprocity and its relation to anger-like emotions in identity-homogeneous and -heterogeneous groups," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 17-34.
    5. Jillian Jordan & Katherine McAuliffe & David Rand, 2016. "The effects of endowment size and strategy method on third party punishment," Experimental Economics, Springer;Economic Science Association, vol. 19(4), pages 741-763, December.
    6. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2016. "Discretionary Sanctions and Rewards in the Repeated Inspection Game," Management Science, INFORMS, vol. 62(2), pages 502-517, February.
    7. Yuzhen Li & Jun Luo & He Niu & Hang Ye, 2023. "When punishers might be loved: fourth-party choices and third-party punishment in a delegation game," Theory and Decision, Springer, vol. 94(3), pages 423-465, April.
    8. Mendoza, Freddy & Restrepo-Plaza, Lina, 2020. "Justicia de Mano Propia: Un Experimento de Castigos de Terceros," Working papers 61, Red Investigadores de Economía.
    9. Robert Stüber, 2020. "The benefit of the doubt: willful ignorance and altruistic punishment," Experimental Economics, Springer;Economic Science Association, vol. 23(3), pages 848-872, September.
    10. Kakizawa, Hisanobu, 2017. "The value of punishment of free riders: A case study on the receiving fee system of the Japanese public broadcasting organization," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168496, International Telecommunications Society (ITS).
    11. Im, Changkuk & Lee, Jinkwon, 2022. "On the fragility of third-party punishment: The context effect of a dominated risky investment option," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    12. Marcin, Isabel & Robalo, Pedro & Tausch, Franziska, 2019. "Institutional endogeneity and third-party punishment in social dilemmas," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 243-264.
    13. Stüber, Robert, 2019. "The benefit of the doubt: Willful ignorance and altruistic punishment," Discussion Papers, Research Unit: Market Behavior SP II 2019-215, WZB Berlin Social Science Center.
    14. Halliday, Simon D. & Lafky, Jonathan, 2019. "Reciprocity through ratings: An experimental study of bias in evaluations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 83(C).
    15. Nigus, Halefom Yigzaw & Abay, Kibrom A., 2024. "Cooperation among community leaders: The role of women’s leadership and exposure to conflict," IFPRI discussion papers 2273, International Food Policy Research Institute (IFPRI).
    16. Abay, Kibrom A. & Nigus, Halefom Yigzaw, 2024. "Cooperation among community leaders: The role of women’s leadership and exposure to conflict," IFPRI discussion papers 2273, International Food Policy Research Institute (IFPRI).
    17. Bartling, Björn & Engl, Florian & Weber, Roberto A., 2014. "Does willful ignorance deflect punishment? – An experimental study," European Economic Review, Elsevier, vol. 70(C), pages 512-524.
    18. Dirk Engelmann & Nikos Nikiforakis, 2015. "In the long-run we are all dead: on the benefits of peer punishment in rich environments," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(3), pages 561-577, October.
    19. Yoshio Kamijo, 2014. "A theory of sanctions: Objectives, degree of heterogeneity, and growth potential matter for optimal use of carrot or stick," Working Papers SDES-2014-13, Kochi University of Technology, School of Economics and Management, revised Oct 2014.
    20. Goeschl, Timo & Jarke, Johannes, 2013. "Second vs. Third Party Punishment under Costly Monitoringː A New Experimental Method and Evidence," WiSo-HH Working Paper Series 6, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.
    21. Nick Feltovich, 2019. "The interaction between competition and unethical behaviour," Experimental Economics, Springer;Economic Science Association, vol. 22(1), pages 101-130, March.
    22. Guerra, Alice & Zhuravleva, Tatyana, 2021. "Do bystanders react to bribery?," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 442-462.
    23. Engel, Christoph & Zamir, Eyal, 2024. "Is transparency a blessing or a curse? An experimental horse race between accountability and extortionary corruption," International Review of Law and Economics, Elsevier, vol. 78(C).
    24. Heim, Réka & Huber, Jürgen, 2019. "Leading-by-example and third-party punishment: Experimental evidence," Journal of Behavioral and Experimental Finance, Elsevier, vol. 24(C).
    25. Koch, Christian & Nikiforakis, Nikos & Noussair, Charles N., 2021. "Covenants before the swords: The limits to efficient cooperation in heterogeneous groups," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 307-321.

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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