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Institutional Endogeneity and Third-party Punishment in Social Dilemmas

Isabel Marcin (), Pedro Robalo and Franziska Tausch ()
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Isabel Marcin: Max Planck Institute for Research on Collective Goods

No 2016_06, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: This paper studies experimentally how the endogeneity of sanctioning institutions affects the severity of punishment in social dilemmas. We allow individuals to vote on the introduction of third-party-administered sanctions, and compare situations in which the adoption of this institution is endogenously decided via majority voting to situations in which it is exogenously imposed by the experimenter. Our experimental design addresses the self-selection and signaling effects that arise when subjects can vote on the institutional setting. We find that punishment is significantly higher when the sanctioning institution is exogenous, which can be explained by a difference in the effectiveness of punishment. Subjects respond to punishment more strongly when the sanctioning institution is endogenously chosen. As a result, a given cooperation level can be reached through milder punishment when third-party sanctions are endogenous. However, overall efficiency does not differ across the two settings as the stricter punishment implemented in the exogenous one sustains high cooperation as subjects interact repeatedly.

Keywords: Endogeneity; Third-party punishment; Voting; Institutions; Social dilemma; Public good (search for similar items in EconPapers)
JEL-codes: C92 D02 D72 H41 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp and nep-pol
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Journal Article: Institutional endogeneity and third-party punishment in social dilemmas (2019) Downloads
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