Punishment and Counter-punishment in Public Good Games: Can We Still Govern Ourselves?

Abstract

A number of experimental studies have shown that the opportunity to punish anti-social behavior increases cooperation levels when agents face a social dilemma. Using a public good experiment, I show that in the presence of counter-punishment opportunities cooperators are less willing to punish free riders. As a result, cooperation breaks down and groups have lower earnings in comparison to a treatment without punishments where free riding is predominant. Approximately one quarter of all punishments are retaliated. Counter-punishments appear to be driven partly by strategic considerations and partly by a desire to reciprocate punishments.

Keywords: public goods, counter-punishment, decentralized punishment, freeriding

JEL Classification: C92, D70, H41