State or nature? Endogenous formal versus informal sanctions in the voluntary provision of public goods

Kenju Kamei; Louis Putterman; Jean-Robert Karl Tyran

doi:10.1007/s10683-014-9405-0

State or nature? Endogenous formal versus informal sanctions in the voluntary provision of public goods

Kenju Kamei, Louis Putterman, Jean-Robert Karl Tyran

41 Citationer (Scopus)

Abstract

We investigate the endogenous formation of sanctioning institutions supposed to improve efficiency in the voluntary provision of public goods. Our paper parallels Markussen et al. (Rev Econ Stud 81:301–324, 2014) in that our experimental subjects vote over formal versus informal sanctions, but it goes beyond that paper by endogenizing the formal sanction scheme. We find that self-determined formal sanctions schemes are popular and efficient when they carry no up-front cost, but as in Markussen et al. informal sanctions are more popular and efficient than formal sanctions when adopting the latter entails such a cost. Practice improves the performance of sanction schemes: they become more targeted and deterrent with learning. Voters’ characteristics, including their tendency to engage in perverse informal sanctioning, help to predict individual voting.

Originalsprog	Engelsk
Tidsskrift	Experimental Economics
Vol/bind	18
Udgave nummer	1
Sider (fra-til)	38-65
Antal sider	28
ISSN	1386-4157
DOI	https://doi.org/10.1007/s10683-014-9405-0
Status	Udgivet - mar. 2015

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10.1007/s10683-014-9405-0

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AU - Tyran, Jean-Robert Karl

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AB - We investigate the endogenous formation of sanctioning institutions supposed to improve efficiency in the voluntary provision of public goods. Our paper parallels Markussen et al. (Rev Econ Stud 81:301–324, 2014) in that our experimental subjects vote over formal versus informal sanctions, but it goes beyond that paper by endogenizing the formal sanction scheme. We find that self-determined formal sanctions schemes are popular and efficient when they carry no up-front cost, but as in Markussen et al. informal sanctions are more popular and efficient than formal sanctions when adopting the latter entails such a cost. Practice improves the performance of sanction schemes: they become more targeted and deterrent with learning. Voters’ characteristics, including their tendency to engage in perverse informal sanctioning, help to predict individual voting.

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State or nature? Endogenous formal versus informal sanctions in the voluntary provision of public goods

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