Third-Party Punishment under Judicial Review: An Economic Experiment on the Effects of a Two-Tier Punishment System

Lewisch Peter (), Ottone Stefania () and Ponzano Ferruccio ()
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Lewisch Peter: University of Vienna, Universitätsring 1, 1010 Wien, Austria
Ottone Stefania: University of Milano-Bicocca, DEMS, Milan, Italy
Ponzano Ferruccio: University of Eastern Piedmont, DIGSPES, Alessandria, Italy

Review of Law & Economics, 2015, vol. 11, issue 2, 209-230

Abstract: This paper analyses, by means of an economic experiment, the impact of a vertical review on third-party punishment. Whereas the existing empirical literature has studied, under many different aspects, third-party costly punishment as such, it has not addressed the impact of a second “instance” (competent to overrule punishment decisions by the first punisher) on the incidence and amount of such first-instance punishment and the underlying unwanted behaviour (“stealing”). In this paper, we apply experimental methodology that allows us to construct in the lab the counterfactual context for a direct institutional comparison that we cannot find in real life. In particular, we examine first of all whether and how the presence of a second “vertical” punishment layer (i.e. of a “second instance”) affects the amount of punishment imposed in the first instance. Secondly, we check whether the presence of a second level of punishment has a deterrent effect on the underlying (undesired) behaviour. Finally, we examine the level of satisfaction of the victims in all scenarios. In our experiments, we find that the introduction of a second (vertical) tier of punishment increases (i) the level of punishment provided for in the first instance, (ii) deterrence with regard to the underlying behaviour (i.e. a reduction in the number of “thefts” being committed), and also (iii) the level of satisfaction for victims. Real-world applications of this study are plentiful, including the organisation of courts and the appeals process as a whole. Our evidence confirms that the presence of an “instance” (a second tier of legal decision making) is, other things equal, likely to generate beneficial effects.

Keywords: third-party punishment; experiment; two-tier punishment system; deterrence (search for similar items in EconPapers)
JEL-codes: D03 K14 K40 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/rle-2015-0018

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