Short Answer

Interpreting Experimental Results

A researcher studies the effect of peer-to-peer penalties on cooperation in a group investment task. Two groups of participants are formed. Group A plays the task, and after each round, participants can pay a small fee to anonymously reduce the earnings of others. Group B plays the same task but does not have this penalty option. The researcher observes that average investment levels are consistently higher in Group A than in Group B. Explain why this experimental setup allows the researcher to conclude that the availability of the penalty option caused the increase in investment.

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Updated 2025-08-13

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