A Comparative Statics Analysis of Punishment in Public-Good Experiments

Nikiforakis, Nikos; Normann, Hans-Theo

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A Comparative Statics Analysis of Punishment in Public-Good Experiments

Experimental Economics, Forthcoming

18 Pages Posted: 18 Oct 2007

See all articles by Nikos Nikiforakis

Nikos Nikiforakis

New York University (NYU) - New York University Abu Dhabi

Hans-Theo Normann

Heinrich Heine University Dusseldorf - Department of Economics; Max Planck Institute for Research on Collective Goods

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Abstract

This paper provides a comparative-statics analysis of punishment in public-good experiments. We vary the effectiveness of punishment, that is, the factor by which punishment reduces the punished player's income. The data show that contributions increase monotonically in punishment effectiveness. High effectiveness leads to near complete cooperation and welfare improvements. Below a certain threshold, however, punishment cannot prevent the decay of cooperation. In these cases, punishment opportunities reduce welfare. The results suggest that the experimenter's choice of the punishment effectiveness is of great importance for the experimental outcome.

Keywords: experimental economics, public goods, punishment

JEL Classification: C90, D70, H41

Suggested Citation: Suggested Citation

Nikiforakis, Nikos and Normann, Hans-Theo, A Comparative Statics Analysis of Punishment in Public-Good Experiments. Experimental Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1021197