Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85005
Authors: 
Engel, Christoph
Year of Publication: 
2013
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2013/9
Abstract: 
Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three alternative channels: (a) identical preferences are common knowledge, but inequity is not pronounced enough to sustain cooperation; (b) heterogeneous preferences are common knowledge; (c) there is preference uncertainty. In a linear public good with punishment meted out by a disinterested participant, I test two implications of the model: (a) participants increase contributions in reaction to imperfect punishment; (b) imperfect punishment helps sustain cooperation if participants experience free-riding.
Subjects: 
deterrence
public good experiment
inequity aversion
imperfect sanction
Fehr/Schmidt preferences
centralized punishement
JEL: 
H41
D63
K42
C91
D03
K14
K13
Document Type: 
Working Paper

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