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When Punishment Doesn't Pay: 'Cold Glow' and Decisions to Punish

Aurelie Ouss

University of Chicago Crime Lab

Alexander Peysakhovich

Yale University - Human Cooperation Lab

February 2015

Economic theories of punishment focus on determining the levels that provide maximal social material payoffs. In calculating these levels several parameters are key: total social costs, total social benefits and the probability that offenders are apprehended. However, levels of punishment often are determined by aggregates of individual decisions. Research in behavioral economics, psychology and neuroscience shows that individuals appear to treat punishment as a private good (“cold glow”). Thus individual choices may not respond “appropriately” to the parameters above. This can have large consequences: realized punishment levels can be predictably above or below those that maximize aggregate material payoffs. Such behavior can lead to inefficiencies in final social outcomes such as levels of cooperation and total costs incurred. We confirm these predictions in a series of experiments. Our findings highlight the importance of the psychology of punishment for understanding social outcomes and for designing social mechanisms, for example in sentencing policy.

Number of Pages in PDF File: 67

Keywords: punishment, cooperation, behavioral economics, law and economics

JEL Classification: D00, D07

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Date posted: April 14, 2013 ; Last revised: March 8, 2015

Suggested Citation

Ouss, Aurelie and Peysakhovich, Alexander, When Punishment Doesn't Pay: 'Cold Glow' and Decisions to Punish (February 2015). Available at SSRN: https://ssrn.com/abstract=2247446 or http://dx.doi.org/10.2139/ssrn.2247446

Contact Information

Aurelie Ouss
University of Chicago Crime Lab ( email )
1101 East 58th Street
Chicago, IL 60637
United States
Alexander Peysakhovich (Contact Author)
Yale University - Human Cooperation Lab ( email )
New Haven, CT
United States
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