Culture and Prevalence of Sanctioning Institutions
27 Pages Posted: 9 Jul 2019 Last revised: 28 Jul 2019
Date Written: July 24, 2019
The interplay of culture and institutions is of high relevance for the economic well-being of societies. Identifying causality between culture and institutions, however, is difficult using field data. Trajectories based on country-specific histories can influence the adoption and the success of institutions in different societies. To investigate the causal impact of culture on the acceptance and prevalence of sanctioning institutions, we report the results of controlled lab experiments in two countries with different cultural trajectories: Germany and Turkey. We find, if the same sanctioning institution is one of two alternatives that people can freely choose in an endogenous choice setting, then the sanctioning institution is the clear winner against a non-sanctioning institution in Germany, as well as in Turkey. Though there are some differences in people’s initial institutional preferences and contribution behavior, the dynamics of institution choice, the evolution of contributions and sanctioning behavior are remarkably similar in both countries. This result is in contrast with previous studies which show that exogenous sanctioning institutions perform well in establishing cooperation in Germany, but substantially less so in Turkey.
Keywords: cooperation, culture, endogenous choice, experiments, institutions, cultural economics, trajectory
JEL Classification: C72, C92, H41
Suggested Citation: Suggested Citation