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Gun for hire: Delegated enforcement and peer punishment in public goods provision

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  • Andreoni, James
  • Gee, Laura K.

Abstract

This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the “hired gun” mechanism, to deter free riding and improve group welfare. Small self-governing organizations often place enforcement in the hands of an appointed leader—the department chair, the building superintendent, and the team captain. This hired gun, we show, need only punish the least compliant group member, and then only punish this person enough so that the person would have rather been the second least compliant. The hired gun mechanism is an example of a low cost device that promotes complete compliance as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time and that this mechanism increases welfare between 15% and 40%. Moreover, the lion's share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.

Suggested Citation

  • Andreoni, James & Gee, Laura K., 2012. "Gun for hire: Delegated enforcement and peer punishment in public goods provision," Journal of Public Economics, Elsevier, vol. 96(11), pages 1036-1046.
    • Handle: RePEc:eee:pubeco:v:96:y:2012:i:11:p:1036-1046
    DOI: 10.1016/j.jpubeco.2012.08.003
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    More about this item

    Keywords

    Public goods; Experiment; Group behavior; Punishment; Free riding; Peer punishment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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