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Sanctions that Signal: an Experiment

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Abstract

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 effect 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 effort of the other players. We find that cooperative subjects perceive actively chosen sanctions as a negative signal which eliminates for them the incentive effect of sanctions.

Suggested Citation

  • Roberto Galbiati & Karl Schlag & Joel van der Weele, 2011. "Sanctions that Signal: an Experiment," Vienna Economics Papers vie1107, University of Vienna, Department of Economics.
    • Handle: RePEc:vie:viennp:vie1107
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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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