A Comparative Statics Analysis of Punishment in Public-Good Experiments

Nikiforakis, Nikos; Normann, Hans-Theo

doi:10.2139/ssrn.747144

A Comparative Statics Analysis of Punishment in Public-Good Experiments

21 Pages Posted: 24 Jun 2005

See all articles by Nikos Nikiforakis

Nikos Nikiforakis

New York University (NYU) - New York University Abu Dhabi

Hans-Theo Normann

Heinrich Heine University Dusseldorf - Department of Economics; Max Planck Institute for Research on Collective Goods

There are 2 versions of this paper

Date Written: June 17, 2005

Abstract

This paper provides a comparative statics analysis of punishment in public-good experiments. We vary systematically the effectiveness of punishment, that is, the factor by which punishment reduces the punished player's income, and we find that contributions to the public good increase monotonically in effectiveness. High effectiveness leads to near complete contribution rates and welfare improvements. Below a certain threshold, however, punishment cannot prevent the decay of cooperation found in the public-good game without punishment. In these cases, the possibility to punish may even worsen welfare. Finally, we show that punishment is a normal and inferior good.

Keywords: Experimental economics, public goods, punishment

JEL Classification: C90

Suggested Citation: Suggested Citation

Nikiforakis, Nikos and Normann, Hans-Theo, A Comparative Statics Analysis of Punishment in Public-Good Experiments (June 17, 2005). Available at SSRN: https://ssrn.com/abstract=747144 or http://dx.doi.org/10.2139/ssrn.747144