Judicial error and cooperation

Thomas Markussen, Louis Putterman and Jean-Robert Tyran

European Economic Review, 2016, vol. 89, issue C, 372-388

Abstract: Cooperation can be induced by an authority with the power to mete out sanctions for free riders, but law enforcement is prone to error. This paper experimentally analyzes preferences for and consequences of errors in formal sanctions against free riders in a public goods game. With type I errors, even full contributors to the public good may be punished. With type II errors, free riders may go unpunished. We find that judicial error undermines cooperation and that the effects of type I and II errors are symmetric. To investigate their relative (dis-)like for error, we let subjects choose what type of error to prevent. We find that subjects prefer type II over type I errors. However, the strength of preferences for preventing type I errors is fully in line with a motive to maximize income and does not indicate any additional psychological or fairness bias against type I errors.

Keywords: Public goods; Sanctions; Type I errors; Type II errors; Willingness to pay (search for similar items in EconPapers)
JEL-codes: C92 H41 K4 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Judicial Error and Cooperation (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:89:y:2016:i:c:p:372-388

DOI: 10.1016/j.euroecorev.2016.08.004

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