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Institutional Endogeneity and Third-party Punishment in Social Dilemmas

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  • Isabel Marcin

    () (Max Planck Institute for Research on Collective Goods)

  • Pedro Robalo

    () (Max Planck Institute for Research on Collective Goods)

  • Franziska Tausch

    () (Max Planck Institute for Research on Collective Goods)

Abstract

This paper studies experimentally how the endogeneity of sanctioning institutions affects the severity of punishment in social dilemmas. We allow individuals to vote on the introduction of third-party-administered sanctions, and compare situations in which the adoption of this institution is endogenously decided via majority voting to situations in which it is exogenously imposed by the experimenter. Our experimental design addresses the self-selection and signaling effects that arise when subjects can vote on the institutional setting. We find that punishment is significantly higher when the sanctioning institution is exogenous, which can be explained by a difference in the effectiveness of punishment. Subjects respond to punishment more strongly when the sanctioning institution is endogenously chosen. As a result, a given cooperation level can be reached through milder punishment when third-party sanctions are endogenous. However, overall efficiency does not differ across the two settings as the stricter punishment implemented in the exogenous one sustains high cooperation as subjects interact repeatedly.

Suggested Citation

  • Isabel Marcin & Pedro Robalo & Franziska Tausch, 2016. "Institutional Endogeneity and Third-party Punishment in Social Dilemmas," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_06, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2016_06
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    3. Pedro Dal Bo & Andrew Foster & Kenju Kamei, 2019. "The Democracy Effect: a weights-based identification strategy," Working Papers 2019-4, Brown University, Department of Economics.
    4. Kamei, Kenju, 2017. "Altruistic Norm Enforcement and Decision-Making Format in a Dilemma: Experimental Evidence," MPRA Paper 76641, University Library of Munich, Germany.
    5. José Gabriel Castillo & Zhicheng Phil Xu & Ping Zhang & Xianchen Zhu, 2021. "The effects of centralized power and institutional legitimacy on collective action," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 56(2), pages 385-419, February.
    6. Björn Toelstede, 2020. "Social hierarchies in democracies and authoritarianism: The balance between power asymmetries and principal-agent chains," Rationality and Society, , vol. 32(3), pages 334-366, August.
    7. Morgan, Stephen N. & Mason, Nicole M. & Shupp, Robert S., 2019. "The effects of voice with(out) punishment: Public goods provision and rule compliance," Journal of Economic Psychology, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Endogeneity; Third-party punishment; Voting; Institutions; Social dilemma; Public good;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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