Punishing Free-Riders: How Group Size Affects Mutual Monitoring and the Provision of Public Goods

44 Pages Posted: 11 Oct 2004

See all articles by Jeffrey P. Carpenter

Jeffrey P. Carpenter

Middlebury College - Department of Economics; IZA Institute of Labor Economics

Date Written: October 2004

Abstract

Because costly punishment is not credible, subgame perfection suggests that punishment will not deter free riding, regardless of the size or structure of groups. However, experiments show that people will punish free riders, even at considerable cost. To examine the implications of agents who punish, we simulate an environment populated with behavioral strategies seen in the lab and use the simulation to develop hypotheses about why group size should matter when punishment is allowed. We test these hypotheses experimentally and examine whether the effect of group size is purely due to the number of group members or if information about other group members is what is important. We find that large groups contribute at rates no lower than small groups because punishment does not fall appreciably in large groups. However, hindrances to monitoring do reduce the provision of the public good.

Keywords: public goods, mutual monitoring, group size, experiment

JEL Classification: C72, C92, H41

Suggested Citation

Carpenter, Jeffrey P., Punishing Free-Riders: How Group Size Affects Mutual Monitoring and the Provision of Public Goods (October 2004). IZA Discussion Paper No. 1337. Available at SSRN: https://ssrn.com/abstract=285001

Jeffrey P. Carpenter (Contact Author)

Middlebury College - Department of Economics ( email )

Munroe Hall
Middlebury, VT 05753
United States
802-443-3241 (Phone)
802-443-2084 (Fax)

HOME PAGE: http://community.middlebury.edu/~jcarpent/index.ht

IZA Institute of Labor Economics

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

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