Punishment in a Regulatory Setting: Experimental Evidence from the VCM

Lisa Anderson and Sarah L Stafford

Journal of Regulatory Economics, 2003, vol. 24, issue 1, 110 pages

Abstract: To analyze the effectiveness of punishment in inducing regulatory compliance, we modify a standard public goods experiment to include a financial penalty for free riding. The design allows us to vary both punishment probability and severity. We introduce the punishment mechanism in both a one-time and a repeated treatment and find that compliance (contributing to the public good) is increasing in expected punishment cost in both treatments. We also find that punishment severity has a larger effect on behavior than punishment probability. In the repeated treatment, we find that past punishment has a negative rather than positive effect on compliance. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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