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Sanctions that Signal: an Experiment

Sanctions are a means to provide incentives towards more pro-social behavior. Yet their implementation can be a signal that past behavior was undesirable. We investigate experimentally the importance of the informational content of the choice to sanction. We place this in a context of a coordination game to focus attention on beliefs and information and less on intrinsic or pro-social motivations. We compare the e ect of sanctions that are introduced exogenously by the experimenter to that of sanctions which have been actively chosen by a subject who takes the role of a fictitious policy maker with superior information about the previous e ort of the other players. We nd that cooperative subjects perceive actively chosen sanctions as a negative signal which eliminates for them the incentive e ect of sanctions.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1107.

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Date of creation: Mar 2011
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Handle: RePEc:vie:viennp:1107
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