Can sanctions induce pessimism? An experiment

Roberto Galbiati, Karl Schlag and Joël van der Weele

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We run an experiment in which two subjects play a two-round minimum effort game in the presence of a third player (principal) who is the only one informed about past effort choices and benefits from a higher minimum effort of the others. Sanctions introduced in the second round by the experimenter lead to more optimistic beliefs and higher efforts. This is not true when sanctions have been imposed by the principal. The possibility that the choice of a sanction is a signal of low effort levels causes players who chose high effort in the first round to be less optimistic.

Keywords: Sanctions; beliefs; expressive law; deterrence; coordination; minimum effort game; leex (search for similar items in EconPapers)
JEL-codes: C92 D83 K42 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Can Sanctions Induce Pessimism? An Experiment (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1150

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