Institutional Endogeneity and Third-Party Punishment in Social Dilemmas

52 Pages Posted: 15 Apr 2016 Last revised: 23 Sep 2019

See all articles by Isabel Marcin

Isabel Marcin

Heidelberg University - Alfred Weber Institute for Economics

Pedro Brito Robalo

Max Planck Institute, Bonn

Franziska Tausch

Max Planck Institute for Research on Collective Goods

Date Written: April 1, 2016

Abstract

This paper studies experimentally how the endogeneity of sanctioning institutions affects the severity of punishment in social dilemmas. We allow individuals to vote on the introduction of third-party-administered sanctions, and compare situations in which the adoption of this institution is endogenously decided via majority voting to situations in which it is exogenously imposed by the experimenter. Our experimental design addresses the self-selection and signaling effects that arise when subjects can vote on the institutional setting. We find that punishment is significantly higher when the sanctioning institution is exogenous, which can be explained by a difference in the effectiveness of punishment. Subjects respond to punishment more strongly when the sanctioning institution is endogenously chosen. As a result, a given cooperation level can be reached through milder punishment when third-party sanctions are endogenous. However, overall efficiency does not differ across the two settings as the stricter punishment implemented in the exogenous one sustains high cooperation as subjects interact repeatedly.

Keywords: Endogeneity, Third-party punishment, Voting, Institutions, Social dilemma, Public good

JEL Classification: C92, D02, D72, H41

Suggested Citation

Marcin, Isabel and Robalo, Pedro Brito and Tausch, Franziska, Institutional Endogeneity and Third-Party Punishment in Social Dilemmas (April 1, 2016). MPI Collective Goods Preprint, No. 2016/06, Available at SSRN: https://ssrn.com/abstract=2764872 or http://dx.doi.org/10.2139/ssrn.2764872

Isabel Marcin (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Pedro Brito Robalo

Max Planck Institute, Bonn ( email )

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

HOME PAGE: http://www.coll.mpg.de/team/page/pedro_robalo

Franziska Tausch

Max Planck Institute for Research on Collective Goods ( email )

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

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