Abstract
We run several experiments which allow us to compare cooperation under perfect and imperfect information in a centralized and decentralized punishment regime. Under perfect and extremely noisy information, aggregate behavior does not differ between institutions. Under intermediate noise, punishment escalates in the decentralized peer-to-peer punishment regime which badly affects efficiency while sustaining cooperation for longer. Only decentralized punishment is often directed at cooperators (perverse punishment). We report several, sometimes subtle, differences in punishment behavior, and how contributions react.
Highlights
Modern societies have centralized sanctioning power as a means to enforce norms (Weber, 1919)
Challenge the idea that peer-to-peer punishment generally enhances cooperation: for example on the basis of punishment which is targeted at cooperators, referred to as anti-social (Herrmann et al, 2008) or perverse punishment (Cinyabuguma et al, 2006), or on the basis of counter-punishment1
We introduce noise in the signals about individual contributions in order to test whether decentralized or centralized punishment is more robust to imperfect information
Summary
Modern societies have centralized sanctioning power as a means to enforce norms (Weber, 1919). Some experiments test the effectiveness of formal, centralized enforcement mechanisms compared to informal, decentralized regimes, while capturing important aspects of institutions. While punishment behavior is very similar, in the elected authority treatment participants cooperate more This suggests that in order to test whether centralization per se matters, one needs to abstract from any mechanism that grants legitimacy, and restrict the analysis to a fair random selection. Due to significantly more punishment, the decentralized regime is less efficient One conclusion from these studies is that the effectiveness of a centralized regime stands and falls with the ability and willingness of just one person to invest resources for punishment, which results in considerably more variability in performance between groups. To the best of our knowledge, we are the first to analyze the effects of centralization of punishment per se under imperfect information
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