Mixing the Carrots with the Sticks: Third Party Punishment and Reward

Abstract

While the opportunity to punish selfish and reward generous behavior coexist in many instances in daily life, in most laboratory studies, the demand for punishment and reward are studied separately from one another. This paper presents the results from an experiment measuring the demand for reward and punishment by 'unaffected' third parties, separately and jointly. We find that the demand for costly punishment is substantially lower when individuals are also given the ability to reward. Similarly, the demand for costly reward is lower when individuals can also punish. The evidence indicates the reason for this is that costly punishment and reward are not only used to alter the material payoff of others as assumed by recent economic models, but also as a signal of disapproval and approval of others' actions, respectively. When the opportunity exists, subjects often choose to withhold reward as a form of costless punishment, and to withhold punishment as a form of costless reward. We conclude that restricting the available options to punishing (rewarding) only, may lead to an increase in the demand for costly punishment (reward).

Toddlers and infants expect individuals to refrain from helping an ingroup victim’s aggressor

“…Second, adults enforce these norms by retaliating against wrongdoers who fail to treat them as expected (11)(12)(13)(14). Third, adults also enforce these norms by punishing wrongdoers who fail to treat others as expected (15)(16)(17)(18); this is referred to as "third-party punishment" (TPP) and can take several forms (19)(20)(21)(22). In direct, costly TPP, which is typically studied in the laboratory using economic games, adults willingly incur costs to engage in TPP: For example, when told they can sacrifice some of their own resources to punish a wrongdoer who has treated a victim unfairly, they often choose to do so (16)(17)(18).…”

The benefit of the doubt: willful ignorance and altruistic punishment

“…By investigating how willful ignorance inuences third-party punishment, my ndings address a large body of literature analyzing the robustness of altruistic punishment (e.g., Charness et al, 2008;Egas and Riedl, 2008;Nikiforakis, 2008;Lewisch et al, 2011;Lotz et al, 2011;Nikiforakis and Engelmann, 2011;Balafoutas and Nikiforakis, 2012;Nikiforakis and Mitchell, 2014;Balafoutas et al, 2016;Goeschl and Jarke, 2016).…”

“…shown new instructions described in sections 3.3 and 5.2. On average, each session lasted approximately 42 minutes and the average payment was e 13.43, with a range between e 8 12 It has been argued that eliciting third parties' punishment decision under role uncertainty does not inuence treatment eects (Bartling et al, 2014;Nikiforakis and Mitchell, 2014). If there was an eect, for instance, by increasing the fraction of third parties who reveal the decision of the dictator, any treatment eect should be underestimated.…”

Institutional endogeneity and third-party punishment in social dilemmas

“…Several empirical studies show that uninvolved third-parties are willing to sacrifice part of their own income to sanction non-cooperative behavior, both in one-shot and in repeated interaction (Fehr and Fischbacher, 2004a,b;Henrich et al, 2006;Kurzban et al, 2007;Almenberg et al, 2010;Engel and Zhurakhovska, 2013;Nikiforakis and Mitchell, 2014). Given that in our experiment the B-types receive identical information about the vote outcome in the ExoPP and EndoPP treatments, they should hold similar beliefs on the cooperative disposition of the Atypes and choose similar punishment vectors.…”