Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144910
Authors: 
Marcin, Isabel
Robalo, Pedro
Tausch, Franziska
Year of Publication: 
2016
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2016/6
Abstract: 
This paper studies experimentally how the endogeneity of sanctioning institutions affects the severity of punishment in social dilemmas. We allow individuals to vote on the introduction of third-party-administered sanctions, and compare situations in which the adoption of this institution is endogenously decided via majority voting to situations in which it is exogenously imposed by the experimenter. Our experimental design addresses the self-selection and signaling effects that arise when subjects can vote on the institutional setting. We find that punishment is significantly higher when the sanctioning institution is exogenous, which can be explained by a difference in the effectiveness of punishment. Subjects respond to punishment more strongly when the sanctioning institution is endogenously chosen. As a result, a given cooperation level can be reached through milder punishment when third-party sanctions are endogenous. However, overall efficiency does not differ across the two settings as the stricter punishment implemented in the exogenous one sustains high cooperation as subjects interact repeatedly.
Subjects: 
endogeneity
third-party punishment
voting
institutions
social dilemma
public good
JEL: 
C92
D02
D72
H41
Document Type: 
Working Paper

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