Cooperation under Peer Sanctioning Institutions - Collective Decisions, Noise, and Endogenous Implementation

Abstract

This dissertation uses behavioral experiment to study cooperation problems in which all actors involved can punish (positive sanction) or reward (negative sanction) each other for their contribution to the collective good. The project focuses on crucial characteristics of sanctioning institutions in small-scale communities. First, settings are considered in which actors are only sanctioned when their peers collectively agree on sanctioning them. It is found that sanctions allocated by majority agreement promote cooperation, and prevent individual actors from sanctioning erratically. However, actors perceive it as unfair when they want to sanction someone but cannot raise collective agreement. Second, the question is addressed whether actors involved in cooperation problems voluntarily implement the option to punish each other in their group, when given the choice whether or not to do so. Findings indicate that actors almost always choose to implement the option to punish. Third, the thesis addresses cooperation problems in which actors sometimes receive inaccurate information about contributions of their peers. It is found that peer punishment does not promote cooperation when information might be inaccurate. This holds especially for punishment that is allocated through collective agreement. Moreover, under the possibility of inaccurate information, the majority of actors choose not to implement the opportunity to punish in their group.