Louis Putterman

Voluntary Association in Public Goods Experiments: Reciprocity, Mimicry, and Efficiency

We find that a process of voluntary association where individuals express a preference about whom they want to be associated with can create strong incentives to increase efficiency and contributions in provision of a public good. This process of endogenous group formation perfectly sorted contributions by the order of group formation. Comparison of middle and last period behaviour suggests that a majority of the subject population are conditional cooperators, with a minority of monetary payoff maximisers. The experiment illustrates that under favourable conditions, where the opportunities of entry and exit are symmetrically balanced, a process of voluntary association can mitigate the free-rider problem.

Do Non-Strategic Sanctions Obey the Law of Demand? The Demand for Punishment in the Voluntary Contribution Mechanism

The prospect of receiving a monetary sanction for free riding has been shown to increase contributions to public goods. We ask whether the impulse to punish is unresponsive to the cost to the punisher, or whether, like other preferences, it interacts with prices to generate a conventional demand curve. We test the price responsiveness of the demand for punishment by randomly varying the cost of reducing the earnings of other group members following laboratory voluntary contribution decisions. In our design, new groups are formed after each interaction and no subject faces any other more than once, so there is no strategic reason to punish. We nonetheless find significant levels of punishment, and we learn that both price and the extent to which the recipients contribution is below the group mean are significant determinants of the quantity of punishment demanded. Moreover, punishment is mainly directed at free riders even when it costs nothing to the punisher. However, the propensity to punish egregious free riding varies considerably within our subject pool, from non-punishers to aggressive punishers.

Cooperation Under the Threat of Expulsion in a Public Goods Experiment

In a public goods experiment with the opportunity to vote to expel members of a group, we found that contributions rose to nearly 100% of endowments with significantly higher efficiency compared with a coexpulsion baseline. Expulsions were strictly of the lowest contributors, and there was an exceptionally strong fall-off in contributions in the last period, when the expulsion threat was unavailable. Our findings support the intuition that the threat of expulsion or ostracism is one device that helps groups to provide public goods.

Economics, Values, and Organization

In this path-breaking book, economists and scholars from diverse disciplines use standard economic tools to investigate the formation and evolution of normative preferences. The fundamental premise is that an adequate understanding of how an economy and society are organized and function cannot be reached without an understanding of the formation and mutation of values and preferences that determine how we interact with others. Its chapters explore the two-way interaction between economic arrangements or institutions, and preferences, including those regarding social status, the well-being of others, and ethical principles. Contributions have been written especially for this volume and are designed to address a wide readership in economics and other disciplines. The contributors are leading scholars who draw on such fields as game theory, economic history, the economics of institutions, and experimental economics, as well as political philosophy, sociology and psychology, to establish and explore their arguments.

Cooperation and Punishment

Punishment can support cooperative behavior in a group, but requires coordination. In an era in which the “tragedy of the commons” has acquired new meaning on a global scale, social scientists are beginning to find hope in human nature. True, we are self-interested creatures capable of destroying the habitats that support us as we each focus on getting our share of the global commons before others beat us to it. Yet Homo sapiens could never have populated the planet and mastered complex technologies and organizational forms had nature not also made us sensitive to one anothers regard. Both field studies and laboratory experiments depict humans as willing to cooperate when convinced that others are doing the same and that at least some will incur costs to sanction cheating. On page 613 in this issue, Janssen et al. (1) show that communication among members of a group is key to establishing cooperation and using punishment effectively, and on page 617, Boyd et al. (2) provide a model of how signaling (a stylized kind of communication) could have allowed punishment and cooperation to evolve.

Share and share alike? Gender-pairing, personality, and cognitive ability as determinants of giving

We conduct dictator game experiments in which women and men are allowed to split

Income distribution, government transfers, and the problem of unequal influence

10 with a completely unknown person or a person of known gender. Subjects also complete personality and cognitive tests. We find that (a) gender information significantly affects giving only in the case of women, who give systematically less to women than to men and persons of unknown gender; (b) largely on account of this difference, women give less than men on average, although the difference is not statistically significant; and (c) giving is significantly explained, especially for women, by personality measures and the cognition score.

Soft budget constraints, social burdens, and labor redundancy in China's state industry

Abstract Several papers in the literature have posited that inequality hinders growth by leading to high distorting taxes and transfers. We retest whether inequality and transfers are positively linked, using several alternative definitions and data sets including new income data assembled by the World Bank. We correct an error in a result of Persson and Tabellini [Persson, T., Tabellini, G., 1994. Is inequality harmful for growth? American Economic Review, 84, 600–621]; we show that the relationship across mixed country samples is, if anything, negative; and we confirm Perottis [Perotti, R., 1996. Growth, income distribution, and democracy: what the data say, Journal of Economic Growth, 1, 149–187.] finding that this relationship weakens or disappears when population structure (proportion over 65) is controlled for. We also introduce two alternative theories of the distribution-transfers link that allow political influence to be a function of income.

Agriculture, Diffusion and Development: Ripple Effects of the Neolithic Revolution

Abstract The soft budget constraint hypothesis of Kornai (1980) offers an attractive explanation of over-manning in public enterprises. Sometimes overlooked in the literature is the fact that governments, especially in transition economies, often use state-owned enterprises (SOEs) to pursue non-financial objectives and to finance the resulting social burdens with subsidies and policy loans. In studying a panel of about 700 SOEs, we find that hardening budget constraints, without at the same time relieving SOEs from their social burdens, was a major proximate cause of rising redundant labor in the early 1990s in China.

Why Capital Suppliers (Usually) Hire Workers: What We Know And What We Need To Know

Are the effects of the Neolithic revolution still impacting on incomes across the world today? I find strong support for this proposition using new, country-specific estimates of the timing of the agricultural transition and provide evidence that the differences are due to how technological diffusion is accounted for. A correction for world migrations since 1500 significantly improves the fit. Transition year also helps to explain income in 1500 itself, and an alternative measure of pre-modern development, state history, has similar ability to predict income in 1500 and 1997.