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Using an exogenous mechanism to examine efficient probabilistic punishment

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  • Qin, Xiangdong
  • Wang, Siyu

Abstract

Free riding can be made more costly by increasing either the probability of being caught or the severity of the punishment. However, neither option is without cost. What is the tradeoff between these strategies? In this study, we introduce an exogenous punishment mechanism that varies the probability and magnitude of punishment to examine this tradeoff. In our punishment system, sanctions are imposed on the lowest contributor according to a predetermined probability rather than assigned by the participants. Our results indicate that exogenous punishment enhances cooperation. Moreover, we show that a punishment of an intermediate magnitude imposed with a 50% probability is significantly more effective than a more severe punishment with a 10% probability or a lesser but certain punishment, even though the expected value of the punishment is equal across the punishment treatments.

Suggested Citation

  • Qin, Xiangdong & Wang, Siyu, 2013. "Using an exogenous mechanism to examine efficient probabilistic punishment," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 1-10.
    • Handle: RePEc:eee:joepsy:v:39:y:2013:i:c:p:1-10
    DOI: 10.1016/j.joep.2013.07.002
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    Cited by:

    1. Kamijo, Y. & Nihonsugi, T. & Takeuchi, A. & Funaki, Y., 2014. "Sustaining cooperation in social dilemmas: Comparison of centralized punishment institutions," Games and Economic Behavior, Elsevier, vol. 84(C), pages 180-195.
    2. Morgan, Stephen N. & Mason, Nicole M. & Shupp, Robert S., 2017. "Do Stakeholder Comments Influence Regulator Behavior? Evidence from a Public Goods Experiment," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258395, Agricultural and Applied Economics Association.
    3. Mekvabishvili, Rati, 2023. "Decentralized or Centralized Governance in Social Dilemmas? Experimental Evidence from Georgia," MPRA Paper 117811, University Library of Munich, Germany.
    4. Jeffrey Wagner, 2021. "Optimal deterrence under misperception of the probability of apprehension and the magnitude of sanctions," Economics Bulletin, AccessEcon, vol. 41(3), pages 2080-2088.
    5. Zhang, Boyu & An, Xinmiao & Dong, Yali, 2021. "Conditional cooperator enhances institutional punishment in public goods game," Applied Mathematics and Computation, Elsevier, vol. 390(C).
    6. Bahník, Štěpán & Vranka, Marek A., 2022. "Experimental test of the effects of punishment probability and size on the decision to take a bribe," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    7. Matteo Migheli & Margherita Saraceno, 2023. "On the propensity to settle or litigate in laboratory disputes," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(2), pages 615-642, July.
    8. Morgan, Stephen N. & Mason, Nicole M. & Shupp, Robert S., 2019. "The effects of voice with(out) punishment: Public goods provision and rule compliance," Journal of Economic Psychology, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Experiments; Public goods; Punishment; Probability;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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