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The Design of (De)centralized Punishment Institutions for Sustaining Co-operation

Author

Listed:
  • Michael Kosfeld

    (University of Zürich)

  • Arno Riedl

    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

Abstract

This discussion paper has resulted in the publication (2007) 'Order without law? Experimental evidence on voluntary cooperation and sanctioning', 2007, KritV - Kritische Vierteljahresschrift fur Gesetzgebung und Rechtswissenschaft , 90, 1-2, 140-155.In this paper we discuss experimental evidence for two different institutional approaches to a possible resolution of the fundamental conflict between social welfare maximization and individual utility maximization. The basic workhorse for modelling this conflict is the voluntary contribution of a group of individuals to a public good. The common element of the investigated mechanisms is that both are based on the imposition of sanctions for free-riding behavior. The main difference between them concerns the question of “who punishes”. In the first approach, punishment is executed by the group members themselves individually, i.e., punishment is decentral in nature. The second approach is based on the idea that individuals may be willing to delegate the punishment to a central, external authority. The key questions to answered are, whether individuals are willing and able to implement such punishment institution, how successfully implemented institutions look like, and whether they can increase the cooperation level of individuals in the group.

Suggested Citation

  • Michael Kosfeld & Arno Riedl, 2004. "The Design of (De)centralized Punishment Institutions for Sustaining Co-operation," Tinbergen Institute Discussion Papers 04-025/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20040025
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    References listed on IDEAS

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    1. Martin Sefton & Robert Shupp & James M. Walker, 2007. "The Effect Of Rewards And Sanctions In Provision Of Public Goods," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 671-690, October.
    2. Anderson, Christopher M. & Putterman, Louis, 2006. "Do non-strategic sanctions obey the law of demand? The demand for punishment in the voluntary contribution mechanism," Games and Economic Behavior, Elsevier, vol. 54(1), pages 1-24, January.
    3. David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism," American Economic Review, American Economic Association, vol. 93(1), pages 366-380, March.
    4. Giorgio Coricelli & Dietmar Fehr & Gerlinde Fellner, 2004. "Partner Selection in Public Goods Experiments," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(3), pages 356-378, June.
    5. Josef Falkinger, 2000. "A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence," American Economic Review, American Economic Association, vol. 90(1), pages 247-264, March.
    6. Claudia Keser & Frans Van Winden, 2000. "Conditional Cooperation and Voluntary Contributions to Public Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 23-39, March.
    7. Ostrom, Elinor & Walker, James & Gardner, Roy, 1992. "Covenants with and without a Sword: Self-Governance Is Possible," American Political Science Review, Cambridge University Press, vol. 86(2), pages 404-417, June.
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    Cited by:

    1. Grimm, Veronika & Mengel, Friederike, 2011. "Matching technology and the choice of punishment institutions in a prisoner's dilemma game," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 333-348, May.
    2. Croson, Rachel & Fatas, Enrique & Neugebauer, Tibor & Morales, Antonio J., 2015. "Excludability: A laboratory study on forced ranking in team production," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 13-26.

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    More about this item

    Keywords

    public good; sanction; punishment; institution; cooperation; experiment;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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