Third-party sanctioning and compensation behavior: Findings from the ultimatum game

Abstract

We measured the beliefs and behavior of third parties who were given the opportunity to add to or deduct from the payoffs of individuals who engaged in an economic bargaining game under different social contexts. Third parties rewarded bargaining outcomes that were equal and compensated victims of unfair bargaining outcomes rather than punishing perpetrators, but were willing to punish when compensation was not an available option. Beliefs of whether unequal bargaining outcomes were fair differed based on the normative context, but actual punishment, compensation, and rewarding behavior did not. This paper makes a contribution to the literature on informal mechanisms of social norm enforcement by comparing negative sanctions, positive sanctions, and compensation behavior by third parties. Disciplines Behavioral Economics | Economics | Personality and Social Contexts | Social Psychology CommentsAt the time of publication, author Alex Chavez was affiliated with the University of Michigan. Currently, he is a faculty member at the Behavioral Ethics Lab at the University of Pennsylvania. Abstract. We measured the beliefs and behavior of third parties who were given the opportunity to add to or deduct from the payoffs of individuals who engaged in an economic bargaining game under different social contexts. Third parties rewarded bargaining outcomes that were equal and compensated victims of unfair bargaining outcomes rather than punishing perpetrators, but were willing to punish when compensation was not an available option. Beliefs of whether unequal bargaining outcomes were fair differed based on the normative context, but actual punishment, compensation, and rewarding behavior did not. This paper makes a contribution to the literature on informal mechanisms of social norm enforcement by comparing negative sanctions, positive sanctions, and compensation behavior by third parties.

Punishment as a Mechanism to Maintain Bilateral Cooperation: A Social Behavior Experiment

“…We also expanded on the findings of previous researchers and contributed to the literature on the relationship between cooperation and the mechanism of punishment. Our findings are consistent with those of previous studies in which researchers have reported that second and third parties punish individuals who undermine the social norm (e.g., Chavez & Bicchieri, 2013;Fehr & Fischbacher, 2004).…”

“…However, there are limitations in second-party punishment, because it is often difficult to achieve cooperation by relying solely on a bilateral mechanism, or through willingness to pay a high cost. Thus, scholars have increasingly focused on punishment from third parties (Chavez & Bicchieri, 2013). Therefore, we proposed the following hypothesis: Hypothesis 2: In comparison with second-party punishment, third-party punishment will involve a reduction in the punishment cost.…”

“…In addition, Charness, Cobo-Reyes, and Jiménez (2008) found that a third party was willing to make a material payoff to equalize the payoff gained by the proposer and the responder. Chavez and Bicchieri (2013) designed an economic bargaining game experiment across different social backgrounds, whereby third parties could add to, or deduct from, the payoff for the proposer and the responder. Chavez and Bicchieri reported that a third party rewarded the parties for bargaining outcomes that yielded an equal benefit for both proposer and responder and compensated the victim of an unfair bargaining outcome rather than punishing the perpetrator.…”

“…Different theories have been developed to explain this process, and these have implicated social mechanisms, such as reputation, group selection, and punishment (Balafoutas, Grechenig, & Nikiforakis, 2014;Chavez & Bicchieri, 2013), as being conducive to enforce social norms. Increasingly, scholars have begun to pay attention to the role of punishment as a mechanism for bringing about human cooperation.…”

Self‐punishment promotes reconciliation with third parties by addressing the symbolic implications of wrongdoing

“…A common response from both victims and third parties is to punish transgressors for their wrongdoing (Darley & Pittman, 2003;Fehr & G€ achter, 2002;Van Prooijen, 2010;Vidmar, 2000;Wenzel & Okimoto, 2016), because punishment is thought to address both dimensions of symbolic concerns. Nevertheless, victims and third parties alike derive satisfaction from seeing transgressors "get what they deserve" (Chavez & Bicchieri, 2013;Lerner & Miller, 1978). Punishment can also directly elevate the victim's status/power by affirming that the victim is valued (Okimoto & Wenzel, 2011).…”