Fine enough or don’t fine at all

Does monetary punishment crowd out pro-social motivation? A natural experiment on hospital length of stay

“…The literature on positive incentives suggests that small rewards are more likely to crowd out intrinsic motivation than large ones (see, e.g., Gneezy and Rustichini, 2000a). Similarly, in a theoretical model designed to explain the results of the aforementioned daycare study by Gneezy and Rustichini (2000b), Lin and Yang (2006) show that a counterproductive effect of fines is more likely to occur if the fine is relatively small (but not insignificant). In our experiment, the daily penalty rate is 1.600 NOK (2.000 NOK in Oslo).…”

“…First, in the daycare study it was the same agents (parents) that had the fine introduced and then subsequently removed, while in our study some agents had the fine introduced while others had the fine removed. Second, there might be slightly different psychological forces at work in the two experiments: Lin and Yang (2006) offer an interesting theoretical explanation for the asymmetric result in the daycare study that has to do with the formation of social norms, where the psychological cost of violating a norm (e.g., being a latecomer) depends not only on the fine, but also on the proportion of the population that violates the norm, implying multiple equilibria. The introduction of a (small) fine can then trigger a bandwagon effect with a large increase in the share of people violating the norm, something that cannot be fully reversed by removing the fine.…”

Institutions influence preferences: Evidence from a common pool resource experiment

“…Fischbacher et al (2004) report conditional cooperation is the most common behavior in one-shot public goods games, and that suggests it may also be common in CPR games. The effect of diminishing guilt on norm compliance was recently explored by Lin and Yang (2005).…”

“…If there are no conditional cooperators in a group,x t has a unique stable steady state, but if enough conditional cooperators are added to the mix, the reciprocal nature of their preferences may cause a second steady state to emerge (a feature shared by other models of reciprocal preferences such as Rabin's (1993) and Lin and Yang's (2005)). The intuition is simple: if conditional cooperators expect group extraction to be low, they will be inclined to extract few tokens.…”

Does monitoring decrease work effort?

“…6 When studying explicit punishment incentives, experimental research also indicates a potentially detrimental effect of sanctions (e.g., Gneezy and Rustichini, 2000b;Lin and Yang, 2006;Fehr and Schmidt, 2000;Fehr and Rockenbach, 2003;Fehr and List, 2004). The negative effect of sanctions is due to a breach of the social norm of trust or to the reduction of the psychological cost arising from the violation of a norm.…”