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Imperfect public monitoring with costly punishment - An experimental study

  • Attila Ambrus

    ()

    (Department of Economics, Harvard University)

  • Ben Greiner

    ()

    (School of Economics, The University of New South Wales)

This paper experimentally investigates the effects of a costly punishment option on cooperation and social welfare in long finitely repeated public good contribution games. In a perfect monitoring environment increasing the severity of the potential punishment monotonically increases both contributions and the average net payoffs of subjects. In a more realistic imperfect monitoring environment, we find a U-shaped relationship between the severity of punishment and average net payoffs. Access to a standard punishment technology in this setting significantly decreases net payoffs, even in the long run. Access to a very severe punishment technology leads to roughly the same payoffs as with no punishment option, as the benefits of increased cooperation offset the social costs of punishing.

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File URL: http://research.economics.unsw.edu.au/RePEc/papers/2011-10.pdf
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Paper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2011-10.

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Length: 24 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:swe:wpaper:2011-10
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  1. Sainty, Barbara, 1999. "Achieving greater cooperation in a noisy prisoner's dilemma: an experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 421-435, July.
  2. Ernst Fehr & Simon Gaechter, 1999. "Cooperation and Punishment in Public Goods Experiments," CESifo Working Paper Series 183, CESifo Group Munich.
  3. Klaus Abbink & Abdolkarim Sadrieh, 2008. "The Pleasure of Being Nasty," FEMM Working Papers 08037, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
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  7. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  8. Fudenberg, Drew & Dreber, Anna & Rand, David G. & Nowak, Martin, 2008. "Winners Don't Punish," Scholarly Articles 2252594, Harvard University Department of Economics.
  9. Yoella Bereby-Meyer & Alvin E. Roth, 2006. "The Speed of Learning in Noisy Games: Partial Reinforcement and the Sustainability of Cooperation," American Economic Review, American Economic Association, vol. 96(4), pages 1029-1042, September.
  10. Sung-Ha Hwang & Samuel Bowles, 2011. "Is Altruism Bad for Cooperation?," Working Papers 1114, Research Institute for Market Economy, Sogang University.
  11. Patel, Amrish & Cartwright, Edward & Mark, Van Vugt, 2010. "Punishment Cannot Sustain Cooperation in a Public Good Game with Free-Rider Anonymity," Working Papers in Economics 451, University of Gothenburg, Department of Economics.
  12. Aoyagi, Masaki & Fréchette, Guillaume, 2009. "Collusion as public monitoring becomes noisy: Experimental evidence," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1135-1165, May.
  13. Cason, Timothy N. & Khan, Feisal U., 1999. "A laboratory study of voluntary public goods provision with imperfect monitoring and communication," Journal of Development Economics, Elsevier, vol. 58(2), pages 533-552, April.
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  15. 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.
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