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Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods?

  • James Andreoni
  • Laura K. Gee

This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the "hired gun" mechanism, to deter free riding and improve group welfare. The "hired gun" mechanism (Andreoni and Gee, 2011) is an example of a low cost device that promotes complete compliances and minimal enforcement as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time, and that this mechanism increases welfare between 15% to 40%. Moreover, the lion's share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17033.

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Date of creation: May 2011
Date of revision:
Publication status: published as “Gun For Hire: Delegated Enforcement and Peer Punishment in Public Goods Provision.” with Laura K. Gee, Journal of Public Economics, 2012, v. 96, 1036- 1046.
Handle: RePEc:nbr:nberwo:17033
Note: PE
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  1. Marie-Claire Villeval & David Dickinson, 2004. "Does Monitoring Decrease Work Effort ? The Complementarity Between Agency and Crowding-Out Theories," Working Papers 0409, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
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  10. Matthias Cinyabuguma & Talbot Page & Louis Putterman, 2006. "Can second-order punishment deter perverse punishment?," Experimental Economics, Springer, vol. 9(3), pages 265-279, September.
  11. Marco Casari, 2004. "On the Design of Peer Punishment Experiments," UFAE and IAE Working Papers 615.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  12. Ertan, Arhan & Page, Talbot & Putterman, Louis, 2009. "Who to punish? Individual decisions and majority rule in mitigating the free rider problem," European Economic Review, Elsevier, vol. 53(5), pages 495-511, July.
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