Endogenous choice of institutional punishment mechanisms to promote social cooperation

• Published in: Public choice Vol. 191; no. 3-4; pp. 309 - 335
• Main Authors: Botelho, Anabela, Harrison, Glenn W., Pinto, Lígia M. Costa, Ross, Don, Rutström, Elisabet E.
• Format: Journal Article
• Language: English
• Published: New York Springer US 01-06-2022; Springer Nature B.V
• Subjects: Cooperation; Economics; Economics and Finance; Endogenous; Enforcement; Institutions; Laboratory experiments; Political Science; Public Finance; Public goods; Punishment; Sanctions; Social institutions; Voluntary; Voting; Wealth; Voting; H41; Public goods; Social institutions; Laboratory experiments; C92; D72; Sanctions
• ISSN: 0048-5829; 1573-7101; 1573-7101
• DOI: 10.1007/s11127-020-00868-5

Does the desirability of social institutions for public goods provision depend on the extent to which they include mechanisms for endogenous enforcement of cooperative behavior? We consider alternative institutions that vary the use of direct punishments to promote social cooperation. In one institution, subjects participate in a public goods experiment in which an initial stage of voluntary contribution is followed by a second stage of voluntary, costly sanctioning. Another institution consists of the voluntary contribution stage only, with no subsequent opportunity to sanction. In a third stage subjects vote for which institution they prefer for future interactions: do they prefer one that does allow sanctions or one that does not allow sanctions? Our results show that even though sanctions are frequently used when available, the clear majority of individuals vote for the institution that does not allow sanctions. Thus, a distinction is required between the principles that guide the
choice of institutions
and the principles that apply to actions
guided by institutions
. Our results indicate that it is the wealth generated by the institution that determines its desirability.