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State or Nature? Formal vs. Informal Sanctioning in the Voluntary Provision of Public Goods

Author

Listed:
  • Kenju Kamei

    (Brown University)

  • Louis Putterman

    (Brown University)

  • Jean-Robert Tyran

    (University of Vienna)

Abstract

The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be misapplied, but also should have no efficiency benefit under standard assumptions of self-interested agents. We experimentally investigate the relative effectiveness of formal vs. informal sanctions in the voluntary provision of public goods. Unsurprisingly, we find that effective formal sanctions are popular and efficient when they are free to impose. Surprisingly, we find that informal sanctions are often more popular and more efficient when effective formal sanctions entail a modest cost. The reason is that informal sanctions achieve more efficient outcomes than theory predicts, especially when the mechanism is chosen by voting.

Suggested Citation

  • Kenju Kamei & Louis Putterman & Jean-Robert Tyran, 2011. "State or Nature? Formal vs. Informal Sanctioning in the Voluntary Provision of Public Goods," Discussion Papers 11-05, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:1105
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kamei, Kenju, 2014. "Promoting Competition or Helping Less-Endowed? An Experiment on Collective Institutional Choices under Intra-Group Inequality," MPRA Paper 56774, University Library of Munich, Germany.
    2. Markussen, Thomas & Putterman, Louis & Tyran, Jean-Robert, 2016. "Judicial error and cooperation," European Economic Review, Elsevier, pages 372-388.
    3. Kamei, Kenju, 2012. "From locality to continent: A comment on the generalization of an experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 207-210.
    4. Balafoutas, Loukas & Kocher, Martin G. & Putterman, Louis & Sutter, Matthias, 2013. "Equality, equity and incentives: An experiment," European Economic Review, Elsevier, vol. 60(C), pages 32-51.
    5. Jean-Robert Tyran & Thomas Markussen & Louis Putterman, 2011. "Self-Organization for Collective Action: An Experimental Study of Voting on Formal, Informal, and No Sanction Regimes," Vienna Economics Papers 1103, University of Vienna, Department of Economics.
    6. Kube, Sebastian & Schaube, Sebastian & Schildberg-Hörisch, Hannah & Khachatryan, Elina, 2015. "Institution formation and cooperation with heterogeneous agents," European Economic Review, Elsevier, vol. 78(C), pages 248-268.
    7. Boyu Zhang & Cong Li & Hannelore Silva & Peter Bednarik & Karl Sigmund, 2014. "The evolution of sanctioning institutions: an experimental approach to the social contract," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 285-303, June.
    8. Thomas Markussen & Jean-Robert Tyran, 2017. "Choosing a Public-Spirited Leader. An experimental investigation of political selection," Discussion Papers 17-04, University of Copenhagen. Department of Economics.

    More about this item

    Keywords

    sanction; social dilemma; public goods; voluntary contribution mechanism; punishment; experiment;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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