Working Paper: CEPR ID: DP5497
Authors: Matthias Sutter; Stefan Haigner; Martin Kocher
Abstract: We analyse an experimental public goods game in which group members can endogenously determine whether they want to supplement a standard voluntary contribution mechanism with the possibility of rewarding or punishing other group members. We find a large and positive effect of endogenous institutional choice on the level of cooperation in comparison to exogenously implemented institutions. This suggests that democratic participation rights enhance cooperation in groups. With endogenous choice, groups typically vote for the reward option, even though punishment is actually more effective in sustaining high levels of cooperation. Our results are evaluated against the predictions of social preference models.
Keywords: endogenous institutional choice; experiment; public goods; punishment; reward; voting
JEL Codes: C72; C91; C92
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| democratic participation rights (D72) | cooperation levels (C71) |
| choice of institutional mechanisms (D47) | cooperation levels (C71) |
| self-selection of institutions (D02) | cooperation levels (C71) |
| reward mechanism choice (D87) | higher contributions (D64) |
| punishment mechanism effectiveness (K40) | contributions (D64) |
| institutional choice leverage (D72) | contributions (D64) |
| endogenous choice of institutions (D02) | democratic premium in cooperation (D70) |
| endogenous institutional choice (D02) | cooperation levels (C71) |