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Punishment Despite Reasonable Doubt—A Public Goods Experiment with Sanctions Under Uncertainty

Authors


  • The authors thank Brian Cooper, Christoph Engel, Sven Fischer, Bruno Frey, Sally Gschwend, Georg von Heusinger, Matthias Lang, Brad LeVeck, Mathew McCubbins, Matteo Rizzolli, Kathy Spier, an anonymous referee, the participants of the 4th Annual Conference on Empirical Legal Studies at USC, the participants of the Ratio Discussion Group at the Max Planck Institute for Research on Collective Goods, the participants of the Frey-Frey-Engel-Workshop, the participants of the Economics Science Association Meeting in Copenhagen, and the participants of the 20th Annual Meeting of the American Law and Economics Association at Princeton.

Kristoffel Grechenig, Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Strasse 10, D-53113 Bonn, Germany; email: grechenig@coll.mpg.de. Grechenig is Senior Research Fellow at the Max Planck Institute for Research on Collective Goods in Bonn, Germany; Nicklisch is Assistant Professor at the University of Hambury, Germany; Thöni is Assistant Professor at the University of St. Gallen, Switzerland.

Abstract

Under a great variety of legally relevant circumstances, people have to decide whether or not to cooperate when they face an incentive to defect. The law sometimes provides people with sanctioning mechanisms to enforce pro-social behavior. Experimental evidence on voluntary public goods provision shows that the option to punish others substantially improves cooperation, even if punishment is costly. However, these studies focus on situations where there is no uncertainty about the behavior of others. We investigate sanctions in a world with “reasonable doubt” about the contributions of others. Interestingly, people reveal a high willingness to punish even if their information about cooperation rates is highly inaccurate. If there is some nontrivial degree of noise, punishment (1) cannot establish cooperation high and (2) reduces welfare even below the level of a setting without punishment. Our findings suggest that sufficient information accuracy about others' behavior is crucial for the efficiency of sanction mechanisms. If a situation is characterized by low information accuracy, precluding sanctions, for example, through high standards of proof, is likely to be optimal.

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