State or Nature? Formal vs. Informal Sanctioning in the Voluntary Provision of Public Goods
Research output: Working paper
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State or Nature? Formal vs. Informal Sanctioning in the Voluntary Provision of Public Goods. / Kamei, Kenju; Putterman, Louis ; Tyran, Jean-Robert.
Department of Economics, University of Copenhagen, 2011.Research output: Working paper
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RIS
TY - UNPB
T1 - State or Nature?
T2 - Formal vs. Informal Sanctioning in the Voluntary Provision of Public Goods
AU - Kamei, Kenju
AU - Putterman, Louis
AU - Tyran, Jean-Robert
N1 - JEL classification: C92, C91, D03, D71, H41
PY - 2011
Y1 - 2011
N2 - The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be misapplied, but also should have no efficiency benefit under standard assumptions of self-interested agents. We experimentally investigate the relative effectiveness of formal vs. informal sanctions in the voluntary provision of public goods. Unsurprisingly, we find that effective formal sanctions are popular and efficient when they are free to impose. Surprisingly, we find that informal sanctions are often more popular and more efficient when effective formal sanctions entail a modest cost. The reason is that informal sanctions achieve more efficient outcomes than theory predicts, especially when the mechanism is chosen by voting.
AB - The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be misapplied, but also should have no efficiency benefit under standard assumptions of self-interested agents. We experimentally investigate the relative effectiveness of formal vs. informal sanctions in the voluntary provision of public goods. Unsurprisingly, we find that effective formal sanctions are popular and efficient when they are free to impose. Surprisingly, we find that informal sanctions are often more popular and more efficient when effective formal sanctions entail a modest cost. The reason is that informal sanctions achieve more efficient outcomes than theory predicts, especially when the mechanism is chosen by voting.
KW - Faculty of Social Sciences
KW - sanction
KW - social dilemma
KW - voluntary contribution mechanism
KW - punishment, experiment
M3 - Working paper
BT - State or Nature?
PB - Department of Economics, University of Copenhagen
ER -
ID: 32470962