The influence of an authority which possibly sanctions, on the contributions in one-shot Public Goods Games

Abstract

To examine the influence of an authority that possibly sanctions, series of one-shot Public Goods Games were conducted. An authority could sanction, that is reward or punish, according to the Low Probability Rule, with probability P = .10 and size of sanction S = 4, the Medium Probability Rule (P = .20 and S = 2), or the High Probability Rule (P = .40 and S = 1). Hypotheses were derived from prospect theory, and it was predicted that for both punishment and reward, the HPR would be most effective to raise contributions and the LPR the least. Punishment was expected to elicit higher contributions than reward. It was found that actors react differently to the varying rules, but not as expected. Actors contributed more if the HPR was applied than when the MPR or LPR was applied. However, contributions were higher if the authority maintained the LPR than when it used the MPR. No difference was discovered in contributions for possible punishment and possible reward. Finally, the influence of risk attitude on contributions was examined, but no clear empirical evidence was found.