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Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods?

James Andreoni () and Laura Gee ()

No 17033, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the "hired gun" mechanism, to deter free riding and improve group welfare. The "hired gun" mechanism (Andreoni and Gee, 2011) is an example of a low cost device that promotes complete compliances and minimal enforcement as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time, and that this mechanism increases welfare between 15% to 40%. Moreover, the lion's share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.

JEL-codes: C72 C91 C92 D7 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo, nep-gth and nep-ure
Date: 2011-05
Note: PE
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Published as “Gun For Hire: Delegated Enforcement and Peer Punishment in Public Goods Provision.” with Laura K. Gee, Journal of Public Economics, 2012, v. 96, 1036- 1046.

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