Self-Organization for Collective Action: An Experimental Study of Voting on Formal, Informal, and No Sanction Regimes

Brown Economics Working Paper

49 Pages Posted: 31 Jan 2011

See all articles by Thomas Markussen

Thomas Markussen

University of Copenhagen - Department of Economics

Louis Putterman

Brown University - Department of Economics

Jean-Robert Tyran

University of Vienna; University of Copenhagen - Department of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 31, 2011

Abstract

Entrusting the power to punish to a central authority is a hallmark of civilization. We study a collective action dilemma in which self‐interest should produce a sub‐optimal outcome absent sanctions for non‐cooperation. We then test experimentally whether subjects make the theoretically optimal choice of a formal sanction scheme that costs less than the surplus it makes possible, or instead opt for the use of informal sanctions or no sanctions. Most groups adopt formal sanctions when they are of deterrent magnitude and cost a small fraction (10%) of the potential surplus. Contrary to the standard theoretical prediction, however, most groups choose informal sanctions when formal sanctions are more costly (40% of the surplus). Being adopted by voting appears to enhance the efficiency of both informal sanctions and non‐deterrent formal sanctions.

Keywords: Formal Sanctions, Informal Sanctions, Experiment, Voting, Cooperation

JEL Classification: C92, C91, D03, D71, H41

Suggested Citation

Markussen, Thomas and Putterman, Louis G. and Tyran, Jean-Robert, Self-Organization for Collective Action: An Experimental Study of Voting on Formal, Informal, and No Sanction Regimes (January 31, 2011). Brown Economics Working Paper. Available at SSRN: https://ssrn.com/abstract=1752268 or http://dx.doi.org/10.2139/ssrn.1752268

Thomas Markussen

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

Louis G. Putterman (Contact Author)

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-3837 (Phone)
401-863-1970 (Fax)

Jean-Robert Tyran

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, Vienna 1090
Austria

HOME PAGE: http://homepage.univie.ac.at/jean-robert.tyran/

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 353 23 027 (Phone)

HOME PAGE: http://www.econ.ku.dk/tyran/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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