On the fragility of third-party punishment: The context effect of a dominated risky investment option

Changkuk Im and Jinkwon Lee

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2022, vol. 98, issue C

Abstract: Experimental studies regularly show that third-party punishment (TPP) substantially exists in various settings. This study further investigates the robustness of TPP under an environment where context effects are involved. In our experiment, we offer a third party an additional but unattractive risky investment option. We find that, when the dominated investment option irrelevant to prosocial behavior is available, the demand for punishment decreases, whereas the demand for investment increases. These findings support our hypotheses that the seemingly unrelated and dominated investment option may work as a compromise and suggest the fragility of TPP in this setting.

Keywords: Third-party punishment; Dominated risky investment; Context effect; Compromise effect; Decoy effect; Neuroeconomics (search for similar items in EconPapers)
JEL-codes: C72 C92 D87 D91 (search for similar items in EconPapers)
Date: 2022
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Working Paper: On the Fragility of Third-party Punishment: The Context Effect of a Dominated Risky Investment Option (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:98:y:2022:i:c:s2214804322000477

DOI: 10.1016/j.socec.2022.101872

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