A Note on Peer Enforcement by Selective Exclusion: An Extended Abstract

In economic experiments, spontaneous emergence of cooperation in social dilemmas has been shown to arise if individuals can impose pecuniary sanctions on others. Reciprocal individuals are willing to punish free riders even if they themselves incur costs when doing so (Ostrom et al. [10], Fehr and Gächter [3]). Although such direct pecuniary punishments occur in the real world (Cordell and McKean [2]), ordinary citizens usually do not have the right to destroy another person’s property, nor do they have the authority to impose fines. What citizens can do, however, is to cease interaction with individuals who free ride in the social dilemma situation, and refuse to cooperate with them in other social or economic circumstances in which they meet. Indeed, our everyday interactions are embedded in a system of interpersonal relations (Granovetter [6]) that require cooperation by two or more individuals (cf. Bowles and Gintis [1]). For example, Japanese villagers, Irish fishermen, and inhabitants of the Solomon Islands have in common that they cut contact with fellow villagers who free ride with respect to fishing, thus denying them the benefits of cooperation in other economic activities (McKean [9], Taylor [13], and Hviding and Baines [7]).