Linking Wealth and Punishment Effectiveness: Punishment and Cooperation Under Congruent Heterogeneities

Abstract

Global and local cooperation in supplying global public goods is often insufficient. In this respect, laboratory experiments show that peer punishment is an effective cooperation‐enhancing instrument. However, it is unclear whether peer punishment would facilitate cooperation and public good provision even under congruent heterogeneities in wealth and punishment effectiveness. To this end, we experimentally study the effect of peer punishment under joint heterogeneities, where either the richest or the poorest member is also the most effective punisher. We compare these joint heterogeneities to treatments with single heterogeneities in either endowment or punishment effectiveness and to a baseline symmetry treatment with homogeneous parties. We find that heterogeneity in punishment effectiveness does not matter for cooperation, whereas endowment heterogeneity reduces cooperation compared to symmetry. This is because rich members contribute a lower portion of their endowment to the public good than their poorer counterparts. We also observe that cooperation is higher under joint heterogeneities in endowment and punishment effectiveness than under endowment heterogeneity (with no differences than under symmetry). This holds even when the rich party gains less from cooperation and is the most effective punisher. (JEL C92, D74, H41)

When punishment strikes late: The effect of a delay in punishment and punishment feedback on cooperation and efficiency.

“…Moreover, inspecting the case where a punishment takes effect in a delay is related to the experimental literature centering on the conditions and boundaries for peer punishments to hold as an effective cooperation-enhancing institution. In this regard, previous studies show that peer punishment is effective in facilitating cooperation under various conditions, for example, in repeated one-shot (i.e., perfect stranger) interactions (Choi & Ahn, 2013;Fehr & Gächter, 2002), under one designated punisher (Grieco et al, 2017;O'Gorman, Henrich, & Van Vugt, 2009), when punishment is unobserved (Fudenberg & Pathak, 2010;Glöckner et al, 2018;Vyrastekova et al, 2011), under heterogeneities in endowments (Visser & Burns, 2015;Weng & Carlsson, 2015), in punishment effectiveness (Dorrough, Glöckner, & Lee, 2017;Nikiforakis, Normann, & Wallace, 2010), in returns from the public good (Nikiforakis, Noussair, & Wilkening, 2012;Reuben & Riedl, 2013), and even under congruent heterogeneities in endowment and punishment (Waichman, 2018). 19 In contrast to the above literature, other studies illustrate the circumstances under which peer punishment is not effective in enhancing cooperation.…”

The specialization of informal social control in a selective community: Fighting in the National Hockey League from 1947 to 2019

“…Cooperation is better sustained when individuals can either transfer their sanctioning power to one another (Gross et al, 2016), or when sanctioners can be compensated by other members of their group (Andreoni and Gee, 2012). Heterogeneity in punishment behavior can also be introduced when certain individuals gain more from punishment, either because anti-social behavior disproportionately effects them (Przepiorka and Berger, 2016), because they stand to benefit more from pro-social behavior (Waichman, 2020), or because a ‘bounty hunter’-type system is in place where rewards are given to those who uncover and sanction anti-social behavior (Li et al, 2021).…”

The effect of options to reward and punish on behavior in bargaining

“…In the latter studies rewards and punishments were imposed using a fixed and symmetric unit cost which was less than one (see alsoCasari, 2005). More recent studies investigated the role of asymmetries in public goods environments with punishment, such as heterogeneous costs of punishment, heterogeneous endowments, variation in group identity, and network-based asymmetries in who can monitor and punish whom(Boosey & Isaac, 2016;Nikiforakis et al, 2010;Waichman, 2020;Weng & Carlsson, 2015).3 These transactions are often initiated via an online marketplace, such as TaskRabbit (https://www.taskrabbit.com/) or Amazon Mechanical Turk (AMT), where employers can post fixed-pay tasks that potential employees can accept.4 The inquiry into what causes deviations from the subgame-perfect money-maximizing equilibrium and may promote agreement and thus efficiency in this simple bargaining setting led to a number of extensions of the ultimatum game Suleiman (1996). studied a game where, in the case of rejection, the pie was exogenously discounted at the second stage, and thus the initially lost opportunity imposed efficiency costs.…”