Cooperation under Punishment: Imperfect Information Destroys it and Centralizing Punishment Does Not Help

28 Pages Posted: 4 Jun 2013

See all articles by Sven Fischer

Sven Fischer

University of Newcastle - Economics

Kristoffel R. Grechenig

Max-Planck-Institute for Research on Collective Goods

Nicolas Meier

Max Planck Institute for Research on Collective Goods

Date Written: April 1, 2013

Abstract

We run several experiments which allow us to compare cooperation under perfect and imperfect information and under a centralized and decentralized punishment regime. We find that (1) centralization by itself does not improve cooperation and welfare compared to an informal, peer-to-peer punishment regime and (2) centralized punishment is equally sensitive to noise as decentralized punishment, that is, it leads to significantly lower cooperation and welfare (total profits). Our results shed critical light on the widespread conjecture that the centralization of punishment institutions is welfare increasing in itself.

Keywords: public goods, cooperation, centralized punishment, imperfect information, decentralized punishment, peer to peer punishment

JEL Classification: C92, K42, H42, D03

Suggested Citation

Fischer, Sven and Grechenig, Kristoffel R. and Meier, Nicolas, Cooperation under Punishment: Imperfect Information Destroys it and Centralizing Punishment Does Not Help (April 1, 2013). MPI Collective Goods Preprint, No. 2013/06, Available at SSRN: https://ssrn.com/abstract=2243478 or http://dx.doi.org/10.2139/ssrn.2243478

Sven Fischer

University of Newcastle - Economics ( email )

Newcastle-upon-Tyne NE1 7RU
United Kingdom

Kristoffel R. Grechenig (Contact Author)

Max-Planck-Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
+49 228 91416-51 (Phone)
+49 228 91416-851 (Fax)

HOME PAGE: http://sites.google.com/site/kristoffelgrechenig

Nicolas Meier

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

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