Chapter

Recommended Play Versus Costly Punishments in a Laboratory Public Goods Game<sup>*</sup>

Ananish Chaudhuri and Tirnud Paichayontvijit

in Dimensions of Economic Theory and Policy

Published in print October 2011 | ISBN: 9780198073970
Published online September 2012 | e-ISBN: 9780199081615 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198073970.003.0017
Recommended Play Versus Costly Punishments in a Laboratory Public Goods Game*

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Numerous studies have investigated the issue of private provision of public goods using a linear public goods game. This game creates conflict between cooperation, which contributes to the public good, and self-interest, which involves free-riding on others' contributions. Using decision-making experiments, this chapter examines voluntary contributions to a public good. It considers two separate mechanisms for sustaining cooperation over time: recommended play and costly punishments. It compares behaviour in these two experimental treatments to a control treatment with no recommendations or punishments. It also analyses behaviour in groups with a fixed composition over time as well as behaviour in groups with members who are randomly re-matched at the end of each round. The chapter shows that contributions in the initial rounds are higher in the treatment with recommendations than in the baseline and punishment treatments. Contributions decrease much faster with recommendation, whereas contributions increase in treatments with punishment over time.

Keywords: public goods; cooperation; voluntary contributions; recommended play; costly punishments; recommendations; self-interest

Chapter.  5054 words.  Illustrated.

Subjects: Microeconomics

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