The Individual-Team Discontinuity Effect on Institutional Choices: Experimental Evidence in Voluntary Public Goods Provision

Kenju Kamei and Katy Tabero
Additional contact information
Katy Tabero: Durham University Business School

No 2022-015, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: A laboratory experiment is used to show that teams as a decision-making unit behave more efficiently than individuals in an institutional setting. Subjects make voting choices over formal versus informal (peer to peer) sanctions in a finitely repeated public goods dilemma. When a formal sanction scheme is selected in their groups, teams vote for deterrent sanction rates much more frequently than individuals. When an informal sanction scheme is selected, teams inflict costly punishment more frequently on low contributors than individuals, thereby reducing the relative frequency of �gmisdirected�h punishment among teams. As such, teams sustain cooperation surprisingly better than individuals regardless of which scheme is enacted. These behavioral patterns are consistent with the idea of �gtruth wins�h which proposes that teams achieve better choices than individuals through deliberation and learning. The results underscore the effectiveness of having teams as a decision-making unit in organizations in combating a moral hazard problem, such as free riding.

Keywords: institution; public goods; experiment; punishment; discontinuity effect (search for similar items in EconPapers)
JEL-codes: C92 D72 H41 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2022-11-10
New Economics Papers: this item is included in nep-cbe, nep-cdm and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The Individual-Team Discontinuity Effect on Institutional Choices: Experimental Evidence in Voluntary Public Goods Provision (2021)
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