Effect of Peer Punishment on Contributions in the Public Good Game Experiment

Using Treatment and Control Groups to Test the Punishment Option in the Public Good Game

Figure 4.14c: Mean Contributions in Worldwide Public Goods Game with Peer Punishment

Analyzing the Decision to Punish

Evaluating a Costly Punishment Decision

In a group experiment, participants are given an initial sum of money and can contribute any amount to a common pool. The total in the pool is multiplied and then distributed equally among all, regardless of their individual contributions. After contributions are revealed, a new rule is introduced: any participant can choose to pay $1 to reduce another participant's earnings by $3. The identity of the person imposing the reduction is kept anonymous. What is the most likely reason the experiment is designed so that imposing a penalty is costly to the person who imposes it?

In a four-person group experiment, participants can contribute to a common project. After contributions are revealed, a rule allows any player to pay $1 to reduce another's earnings by $3. Player A decides to use this option once to penalize Player B for contributing very little. What is the immediate net change in the total earnings of the four-person group as a direct result of this single act of punishment?

The Punisher's Dilemma

In a group economic experiment, individuals can contribute to a common pool. After contributions are revealed, players are given the option to pay a personal cost to reduce the earnings of another player. A key feature of this option is that the identity of the player imposing the penalty is kept secret from the person being penalized. What is the most likely reason for this anonymity in the experimental design?

In a group experiment where individuals can contribute to a common pool, a punishment mechanism is introduced. Any player can pay $1 to reduce another player's earnings by $3. From a purely financial standpoint for the current round, a player who chooses to punish another will see an immediate increase in their own personal earnings.

Analyzing the Rationale for Costly Punishment

In a multi-round group experiment, four participants each receive an endowment and can contribute any portion of it to a common project. The total amount in the project is multiplied and distributed equally among all four members, regardless of their individual contributions. After contributions are revealed each round, participants have the option to anonymously pay $1 to reduce another participant's earnings by $3.

Consider the following contributions in the first round:

• Player 1: $18
• Player 2: $15
• Player 3: $5
• Player 4: $0

From the perspective of Player 1, which statement best analyzes the decision to punish another player in this scenario?

In a multi-round group experiment, participants can contribute to a common pool. After each round, contributions are revealed, and players have the option to anonymously pay $1 to reduce another player's earnings by $3. In the first round, Player A contributes a high amount, while Player B contributes nothing. Player A then chooses to pay $1 to reduce Player B's earnings by $3. Which of the following best explains Player A's action as a strategic decision within the context of the multi-round game?

In a four-person group experiment, participants can contribute to a common project. After contributions are revealed, a rule allows any player to pay $1 to reduce another's earnings by $3. Player A decides to use this option once to penalize Player B for contributing very little. What is the immediate net change in the total earnings of the four-person group as a direct result of this single act of punishment?