 Carry a big stick, or no stick at allVicente Calabuig, Enrique Fatas (), Gonzalo Olcina () and Ismael Rodriguez-Lara Journal of Economic Psychology, 2016, vol. 57, issue C, 153-171 Abstract: We investigate the effect of costly punishment in a trust game with endowment heterogeneity. Our findings indicate that the difference between the investor and the allocator’s initial endowments determines the effect of punishment on trust and trustworthiness. Punishment fosters trust only when the investor is wealthier than the allocator. Otherwise, punishment fails to promote trusting behavior. As for trustworthiness, the effect is just the opposite. The higher the difference between the investor and the allocator’s initial endowments, the less willing allocators are to pay back. We discuss the consistency of our findings with social preference models (like inequality aversion, reciprocity), the capacity of punishment (i.e., the deterrence hypothesis) and hidden costs of punishment (i.e., models of intrinsic and extrinsic motivation). Our results are hardly coherent with the first two (inequality aversion and deterrence), but roughly consistent with the latter. Keywords: Trust game; Endowment heterogeneity; Punishment; Deterrence hypothesis; Crowding-out; Intrinsic and extrinsic motivation; Experimental economics (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:57:y:2016:i:c:p:153-171 DOI: 10.1016/j.joep.2016.09.006 Access Statistics for this article Journal of Economic Psychology is currently edited by G. Antonides and D. Read More articles in Journal of Economic Psychology from Elsevier |
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