TY - UNPB

T1 - Self-Organization for Collective Action

T2 - An Experimental Study of Voting on Formal, Informal, and No Sanction Regimes

AU - Markussen, Thomas

AU - Putterman, Louis

AU - Tyran, Jean-Robert

N1 - JEL Classification: C92, C91, D03, D71, H41

PY - 2011

Y1 - 2011

N2 - Entrusting the power to punish to a central authority is a hallmark of civilization. We study a collective action dilemma in which self-interest should produce a sub-optimal outcome absent sanctions for non-cooperation. We then test experimentally whether subjects make the theoretically optimal choice of a formal sanction scheme that costs less than the surplus it makes possible, or instead opt for the use of informal sanctions or no sanctions. Most groups adopt formal sanctions when they are of deterrent magnitude and cost a small fraction (10%) of the potential surplus. Contrary to the standard theoretical prediction, however, most groups choose informal sanctions when formal sanctions are more costly (40% of the surplus). Being adopted by voting appears to enhance the efficiency of both informal sanctions and non-deterrent formal sanctions.

AB - Entrusting the power to punish to a central authority is a hallmark of civilization. We study a collective action dilemma in which self-interest should produce a sub-optimal outcome absent sanctions for non-cooperation. We then test experimentally whether subjects make the theoretically optimal choice of a formal sanction scheme that costs less than the surplus it makes possible, or instead opt for the use of informal sanctions or no sanctions. Most groups adopt formal sanctions when they are of deterrent magnitude and cost a small fraction (10%) of the potential surplus. Contrary to the standard theoretical prediction, however, most groups choose informal sanctions when formal sanctions are more costly (40% of the surplus). Being adopted by voting appears to enhance the efficiency of both informal sanctions and non-deterrent formal sanctions.

KW - Faculty of Social Sciences

KW - formal sanctions

KW - informal sanctions

KW - experiment

KW - cooperation

KW - punishment

M3 - Working paper

BT - Self-Organization for Collective Action

PB - Department of Economics, University of Copenhagen

ER -