Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/56916 
Year of Publication: 
2011
Series/Report no.: 
Jena Economic Research Papers No. 2011,046
Publisher: 
Friedrich Schiller University Jena and Max Planck Institute of Economics, Jena
Abstract: 
In a situation, where it is efficient for one of two parties to pollute but highly inefficient if both parties do so, the harmed third party can freely impose its damage claims on both parties what crucially determines which equilibrium to expect. Whereas 'equality before the law' requires equal punishments, efficient equilibria are predicted when holding one party responsible and letting the other escape punishment. After discussing equilibrium selection for the game, we report on an experiment with two treatment variables: one that determines when the harmed party announces its potential damage claims and one varying a game- and justice-unrelated difference between the two culprits. According to our experimental data, 'equality before the law' dominates but is weakened by asymmetry in wealth and the possibility to announce sanctions.
Subjects: 
law and economics
equality vs. efficiency
equilibrium selection
laboratory experiments
JEL: 
C72
C92
K00
Document Type: 
Working Paper

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