Cooperation limitations under a one-time threat of expulsion and punishment

Aaron Lowen and Pamela Schmitt ()

Departmental Working Papers from United States Naval Academy Department of Economics

Abstract: We examine the role one-time threats of expulsion and punishment have on voluntary contributions in a public goods game. This paper extends the work of Cinyabuguma, Page, and Putterman (2005), who find that the threat of expulsion in every period raises contributions to near Pareto Optimal levels. In our experiments, participants played in 15-round sessions where they were allowed to vote to remove other subjects only after round 5 and in one design also voted whether to punish the remaining subjects after round 10. We find that the additional threat of punishment not only increased the contributions of participants before the punishment vote, but also resulted in the expulsion of participants who had contributed more than in the no punishment treatment. Efficiency with expulsion is 58.07% without punishment, and 57.13% with punishment, including the cost for voting and punishment. Our findings indicate that the threat of expulsion as a sanctioning mechanism may not be helpful for public good provision unless expulsion can occur in every period, the threat of costly punishment increases contributions with little impact on efficiency, and that standards for inclusion rise when later punishment is available.

Pages: 16 pages
Date: 2011-03
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-gth and nep-pbe
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Journal Article: Cooperation limitations under a one-time threat of expulsion and punishment (2013)
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