Voting on the threat of exclusion in a public goods experiment

Abstract

Ostracism is practiced by virtually all societies around the world as a means of enforcing cooperation. In this paper, we use a public goods experiment to study whether groups choose to implement an institution that allows for the exclusion of members. We distinguish between a costless exclusion institution and a costly exclusion institution that, if chosen, reduces the endowment of all players. We also provide a comparison with an exclusion institution that is exogenously imposed upon groups. A significant share of the experimental groups choose the exclusion institution, even when it comes at a cost, and the support for the institution increases over time. Average contributions to the public good are significantly higher when the exclusion option is available, not only because low contributors are excluded but also because high contributors sustain a higher cooperation level under the exclusion institution. Subjects who vote in favor of the exclusion institution contribute more than those who vote against it, but only when the institution is implemented. These results are largely inconsistent with standard economic theory but can be better explained by assuming heterogeneous groups in which some players have selfish and others have social preferences.

The choice of institutions to solve cooperation problems: a survey of experimental research

“…Average contributions are significantly higher in the groups with punishment than in the groups without punishment (80 vs 39%), and also average payoffs are significantly higher. Dannenberg et al (2019) let groups repeatedly choose between a standard public goods game and a modified version in which players can vote to exclude another player. The treatments differ in whether the exclusion option involves a fixed cost or not.…”

“…A common finding is that subjects with a strong cooperative inclination vote in favor of the institution (Dal Bó et al 2010;Ertan et al 2009;Mengel 2009, 2011;Weck-Hannemann 2003, 2004;Kocher et al 2016;Vollan et al 2017;Gallier 2017;Fehr and Williams 2017). Furthermore, subjects who have experienced very low levels of cooperation in the past are more likely to vote in favor of the institution (Bohnet and Kübler 2005;Barrett and Dannenberg 2017;Dal Bó et al 2010;Dannenberg et al 2019). Subjects who have made bad experience with the institution, for instance, by receiving punishment, sometimes oppose the institution later (Ostrom et al 1992).…”

“…The authors explain this finding with the importance and long history of authoritarian norms in China. Gallier (2017) and Dannenberg et al (2019) also report only small and insignificant differences in cooperation between endogenously and exogenously implemented institutions, even though their experiments were conducted with German students. A possible explanation for this result in Gallier (2017) may be that the subjects play ten rounds of a standard public goods game before they vote on the implementation of a formal non-deterrent punishment institution.…”

“…During these rounds, players already accumulate information about the cooperativeness of the group which perhaps limits the value of the signal that is associated with voting in favor of the institution. Dannenberg et al (2019) study the effect of an exclusion institution which can be used to exclude players from the group. While this institution does not change the zero contributions equilibrium, one could speculate that the institution is psychologically perceived as a strong institution that is similarly effective on groups that have chosen it and groups that are assigned to it.…”

“…Similar results are reported by Weck-Hannemann (2003, 2004), Kosfeld et al (2009), Sutter et al (2010, Kocher et al (2016), andGallier (2017). Other studies provide comparisons where the differences between the endogenous case and the exogenous case are positive but small (Grimm and Mengel 2009;Dal Bó et al 2010;Sutter et al 2010;Dal Bó et al 2018;Dannenberg et al 2019).…”