Governing Collective Action in the Face of Observational Error

Thomas Markussen, Louis Putterman and Liangjun Wang

No 2017-2, Working Papers from Brown University, Department of Economics

Abstract: We present results from a repeated public goods experiment where subjects choose by vote one of two sanctioning schemes peer-to-peer (informal) or centralized (formal). We introduce, in some treatments, a moderate amount of noise (a 10 percent probability that a contribution is reported incorrectly) affecting either one or both sanctioning environments. We find that the institution with more accurate information is always by far the most popular, but noisy information undermines the popularity of peer-to-peer sanctions more strongly than that of centralized sanctions. This may contribute to explaining the greater reliance on centralized sanctioning institutions in complex environments.

Date: 2017
New Economics Papers: this item is included in nep-cbe, nep-cdm and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:bro:econwp:2017-2

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