Do People Accurately Anticipate Sanctions?

44 Pages Posted: 6 Jul 2013

See all articles by Hubert Janos Kiss

Hubert Janos Kiss

Eötvös Loránd University; Hungarian Academy of Sciences (HAS) - Institute of Economics CERS-HAS (IEHAS)

Raúl López-Pérez

Universidad Autónoma de Madrid - Department of Economic Analysis

Date Written: January 1, 2011

Abstract

We consider an experiment with four different games. In each, a first mover A can choose between two allocations of payoffs for her and a co-player B, who has then the option to either punish or reward A. Two treatments are examined: One with monetary sanctions (punishment/reward) and another one with non-monetary sanctions (i.e., approval and disapproval). In both, we elicit first movers’ expectations to study whether they accurately predict the average sanction at each allocation. Our results in both treatments indicate that most subjects anticipate correctly the sign of the average sanction, although the strength of the sanction is predicted with a substantial error. Yet this error exhibits no systematic bias, except in those allocations where first movers happen to be rewarded, as they tend to underestimate the reward. In this line, we find symptomatic evidence that "sticks" are better anticipated than "carrots", thus suggesting a relative advantage of punishment in providing incentives.

Keywords: Approval, disapproval, expectations, monetary sanctions, non-monetary sanctions, punishment, rewards, social norms

JEL Classification: C70, C91, D63, D74, Z13

Suggested Citation

Kiss, Hubert Janos and López-Pérez, Raúl, Do People Accurately Anticipate Sanctions? (January 1, 2011). Southern Economic Journal, Vol. 79, No. 2, 2012. Available at SSRN: https://ssrn.com/abstract=2208715 or http://dx.doi.org/10.2139/ssrn.2208715

Hubert Janos Kiss

Eötvös Loránd University ( email )

Pazmany Peter setany 1A
Budapest, -- H1117
Hungary

Hungarian Academy of Sciences (HAS) - Institute of Economics CERS-HAS (IEHAS) ( email )

Budaorsi ut 45
Budapest, 1112
Hungary

Raúl López-Pérez (Contact Author)

Universidad Autónoma de Madrid - Department of Economic Analysis ( email )

Carretera Colmenar Viejo
Madrid, E-28049
Spain

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