Judicial Error and Cooperation

Thomas Markussen, Louis Putterman, Jean-Robert Tyran

Cooperation can be induced by an authority with the power to mete out sanctions for free riders, but law enforcement is prone to error. This paper experimentally analyzes preferences for and consequences of errors in formal sanctions against free riders in a public goods game. With type I errors, even full contributors to the public good may be punished. With type II errors, free riders may go unpunished. We find that judicial error undermines cooperation and
that the effects of type I and II errors are symmetric. To investigate their relative (dis-)like for error, we let subjects choose what type of error to prevent. By use of an incentive-compatible mechanism, we find that subjects prefer type II over type I errors. We find that the strength of this preference is fully in line with a motive to maximize income and does not indicate any additional psychological or fairness bias against type I errors.

Department of Economics, Vienna Center for Experimental Economics
External organisation(s)
University of Copenhagen, Brown University
No. of pages
Publication date
Austrian Fields of Science 2012
502010 Public finance, 505016 Legal theory, 502045 Behavioural economics
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