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Imperfect public monitoring with costly punishment - An experimental study

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  • Attila Ambrus

    (Department of Economics, Harvard University)

  • Ben Greiner

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

Abstract

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.

Suggested Citation

  • Attila Ambrus & Ben Greiner, 2011. "Imperfect public monitoring with costly punishment - An experimental study," Discussion Papers 2011-10, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2011-10
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2011-10.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    public good contribution experiments; imperfect monitoring; welfare implications of costly punishment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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