Sustaining Contributions with the Threat of Punishment
In the worldwide public good game, some cities demonstrated that the mere threat of punishment was effective in maintaining cooperation. In these locations, the availability of a penalty mechanism was sufficient to prevent the decline in contributions that typically occurs over successive rounds.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
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Learn After
Two groups participate in an experiment where they can contribute to a shared project over ten successive rounds. In each round, the total contributions are increased by a fixed percentage and then distributed equally among all participants, regardless of their individual contributions.
- Group A has no mechanism to influence each other's earnings. Their average contribution starts high but steadily decreases with each round.
- Group B is informed that a mechanism exists allowing them to penalize low contributors, but records show this mechanism is very rarely used. Despite this, Group B's average contribution remains consistently high across all ten rounds.
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