Gun for Hire: Does Delegated Enforcement Crowd Out Peer Punishment in Giving to Public Goods?

22 Pages Posted: 9 May 2011 Last revised: 16 Jan 2025

See all articles by James Andreoni

James Andreoni

University of California, San Diego (UCSD)

Laura Gee

Tufts University; IZA

Date Written: May 2011

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.

Suggested Citation

Andreoni, James and Gee, Laura, Gun for Hire: Does Delegated Enforcement Crowd Out Peer Punishment in Giving to Public Goods? (May 2011). NBER Working Paper No. w17033, Available at SSRN: https://ssrn.com/abstract=1833169

James Andreoni (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

HOME PAGE: http://econ.ucsd.edu/~jandreon/

Laura Gee

Tufts University ( email )

Medford, MA 02155
United States

IZA

P.O. Box 7240
Bonn, D-53072
Germany

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