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

Author(s)
Kenju Kamei, Louis Putterman, Jean-Robert Tyran
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.

Organisation(s)
Department of Economics, Vienna Center for Experimental Economics
External organisation(s)
Durham University, Brown University
Journal
Experimental Economics
Volume
18
Pages
38 - 65
No. of pages
28
ISSN
1386-4157
DOI
https://doi.org/10.1007/s10683-014-9405-0
Publication date
03-2015
Peer reviewed
Yes
Austrian Fields of Science 2012
502045 Behavioural economics, 502021 Microeconomics
Keywords
Portal url
https://ucris.univie.ac.at/portal/en/publications/state-or-nature-endogenous-formal-versus-informal-sanctions-in-the-voluntary-provision-of-public-goods(8644ed53-a1d6-4b65-a6bd-575c6e3ed86b).html