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When Punishment Fails: Research on Sanctions, Intentions and Non- Cooperation

  • Daniel Houser

    (ICES, Department of Economics, George Mason University)

  • Erte Xiao

    (ICES, Department of Economics, George Mason University)

  • Kevin McCabe

    (ICES, Department of Economics, George Mason University)

  • Vernon Smith

    (ICES, Department of Economics, George Mason University)

People can become less cooperative when threatened with sanctions, and researchers have pointed to both 'intentions' and incentives as sources of this effect. This paper reports data from a novel experimental design aimed at determining the relative importance of intentions and incentives in producing non-cooperative behavior in a personal exchange environment. Subjects play one-shot investment games in pairs. Investors send an amount to trustees and request a return on this investment and, in some treatments, are given the option to threaten sanctions to enforce this return request. The decisions of trustees who face credible threats intentionally imposed (or not) by their investors are compared to the decisions of trustees who face threats randomly imposed (or not) by nature. When not threatened, trustees typically decide to return a positive amount that is less than the investor requested. When threatened with sanctions this decision becomes least common. In particular, under severe sanction threats most trustees return the desired amount, while under weak threats the most common decision is to return nothing. Critically, these results do not depend on whether the trustee is threatened intentionally by their investor or randomly by nature: trustees who are threatened with weak sanctions are significantly more likely to provide a zero return to their investors, even when they know that their investors had no role in imposing the threat. Our findings lend support to the view that credible threats of sanctions generate a “cognitive shift” that crowds-out norm-based motivations and increases the likelihood of income-maximizing behavior.

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File URL: http://econwpa.repec.org/eps/exp/papers/0502/0502001.pdf
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Paper provided by EconWPA in its series Experimental with number 0502001.

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Length: 52 pages
Date of creation: 07 Feb 2005
Date of revision: 18 Feb 2005
Handle: RePEc:wpa:wuwpex:0502001
Note: Type of Document - pdf; pages: 52
Contact details of provider: Web page: http://econwpa.repec.org

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