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Institutional Endogeneity and Third-party Punishment in Social Dilemmas

Author

Listed:
  • Isabel Marcin

    (Max Planck Institute for Research on Collective Goods)

  • Pedro Robalo

    (Max Planck Institute for Research on Collective Goods)

  • Franziska Tausch

    (Max Planck Institute for Research on Collective Goods)

Abstract
This paper studies experimentally how the endogeneity of sanctioning institutions affects the severity of punishment in social dilemmas. We allow individuals to vote on the introduction of third-party-administered sanctions, and compare situations in which the adoption of this institution is endogenously decided via majority voting to situations in which it is exogenously imposed by the experimenter. Our experimental design addresses the self-selection and signaling effects that arise when subjects can vote on the institutional setting. We find that punishment is significantly higher when the sanctioning institution is exogenous, which can be explained by a difference in the effectiveness of punishment. Subjects respond to punishment more strongly when the sanctioning institution is endogenously chosen. As a result, a given cooperation level can be reached through milder punishment when third-party sanctions are endogenous. However, overall efficiency does not differ across the two settings as the stricter punishment implemented in the exogenous one sustains high cooperation as subjects interact repeatedly.

Suggested Citation

  • Isabel Marcin & Pedro Robalo & Franziska Tausch, 2016. "Institutional Endogeneity and Third-party Punishment in Social Dilemmas," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_06, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2016_06
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    References listed on IDEAS

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    Cited by:

    1. Astrid Dannenberg & Carlo Gallier, 2020. "The choice of institutions to solve cooperation problems: a survey of experimental research," Experimental Economics, Springer;Economic Science Association, vol. 23(3), pages 716-749, September.
    2. Kenju Kamei & Smriti Sharma & Matthew J. Walker, 2023. "Collective Sanction Enforcement: New Experimental Evidence from Two Societies," Keio-IES Discussion Paper Series 2023-014, Institute for Economics Studies, Keio University.
    3. Pascal Langenbach & Franziska Tausch, 2019. "Inherited Institutions: Cooperation in the Light of Democratic Legitimacy," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(2), pages 364-393.
    4. Pedro Dal Bo & Andrew Foster & Kenju Kamei, 2019. "The Democracy Effect: a weights-based identification strategy," Working Papers 2019-4, Brown University, Department of Economics.
    5. Kamei, Kenju, 2017. "Altruistic Norm Enforcement and Decision-Making Format in a Dilemma: Experimental Evidence," MPRA Paper 76641, University Library of Munich, Germany.
    6. Kenju Kamei & Smriti Sharma & Matthew J. Walker, 2023. "Sanction Enforcement among Third Parties:New Experimental Evidence from Two Societies," Keio-IES Discussion Paper Series 2023-010, Institute for Economics Studies, Keio University.
    7. Thomas Markussen & Jean-Robert Tyran, 2023. "Is There a Dividend of Democracy? Experimental Evidence from Cooperation Games," CESifo Working Paper Series 10616, CESifo.
    8. Im, Changkuk & Lee, Jinkwon, 2022. "On the fragility of third-party punishment: The context effect of a dominated risky investment option," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    9. Dal Bó, Pedro & Foster, Andrew & Kamei, Kenju, 2024. "The democracy effect: A weights-based estimation strategy," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 31-45.
    10. José Gabriel Castillo & Zhicheng Phil Xu & Ping Zhang & Xianchen Zhu, 2021. "The effects of centralized power and institutional legitimacy on collective action," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 56(2), pages 385-419, February.
    11. Fanny E. Schories, 2022. "The Influence of Indirect Democracy and Leadership Choice on Cooperation," Experimental Economics, Springer;Economic Science Association, vol. 25(4), pages 1173-1201, September.
    12. Billinger, Stephan & Rosenbaum, Stephen Mark, 2023. "On the limits of hierarchy in public goods games: A survey and meta-analysis on the effects of design variables on cooperation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    13. Björn Toelstede, 2020. "Social hierarchies in democracies and authoritarianism: The balance between power asymmetries and principal-agent chains," Rationality and Society, , vol. 32(3), pages 334-366, August.
    14. Morgan, Stephen N. & Mason, Nicole M. & Shupp, Robert S., 2019. "The effects of voice with(out) punishment: Public goods provision and rule compliance," Journal of Economic Psychology, Elsevier, vol. 74(C).
    15. Xu, Zhicheng, 2023. "Obedience to the symbol of authority: Experimental evidence on the symbolic source of legitimate authority," European Journal of Political Economy, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    Endogeneity; Third-party punishment; Voting; Institutions; Social dilemma; Public good;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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