Alleviation and sanctions in social dilemma games

Abstract

This paper reports an experiment which compares behaviour in two punishment regimes: (i) a standard public goods game with punishment in which subjects are given the opportunity to punish other group members (democratic punishment regime) and (ii) a public goods game environment where all group members exogenously experience an automatic reduction of their income (irrespective of their behaviour) and are given the opportunity to alleviate the automatic penalty (undemocratic punishment regime). We employ a within-subjects design where subjects experience both environments and control for order effects by alternating their sequence. Our findings indicate that average contributions and earnings in the undemocratic punishment environment are significantly lower relative to the standard public goods game with punishment. We also observe that in the undemocratic environment average contributions decay over time only when subjects have experienced the standard public goods game with punishment. As a result, alleviation is significantly less when subjects have experienced the standard public goods game with punishment compared to when they do not have such experience. However, the assignment of punishment is robust irrespective of the order in which the games are played.