Nikos Nikiforakis

A Comparative Statics Analysis of Punishment in Public-Good Experiments

This paper provides a comparative statics analysis of punishment in public-good experiments. We vary systematically the effectiveness of punishment, that is, the factor by which punishment reduces the punished players income, and we find that contributions to the public good increase monotonically in effectiveness. High effectiveness leads to near complete contribution rates and welfare improvements. Below a certain threshold, however, punishment cannot prevent the decay of cooperation found in the public-good game without punishment. In these cases, the possibility to punish may even worsen welfare. Finally, we show that punishment is a normal and inferior good.

Feedback, Punishment and Cooperation in Public-Good Experiments

A number of studies have shown that peer punishment can sustain cooperation in public good games. This paper shows that the format used to give subjects feedback is critical for the efficacy of punishment. Providing subjects with information about the earnings of their peers leads to lower contributions and earnings compared to a treatment in which subjects receive information about the contributions of their peers even though the feedback format does not affect incentives. The data suggest that this is because the feedback format acts as a coordination device, which influences the contribution standards that groups establish.

Altruistic Punishment and the Threat of Feuds

Altruistic punishment may promote cooperation, but can also lead to costly feuds. We examine how the threat of feuds a¤ects individuals willingness to engage in altruistic punishment in a public good experiment in which the number of stages is determined by participants actions. The design allows participants to use a range of punishment strategies. We …nd that participants employ strategies that prevent the breakout of feuds. When feuds can span several periods, the extent of altruistic punishment is greatly reduced. This leads to progressively lower levels of cooperation and earnings relative to a baseline treatment where punishment cannot be avenged.

Asymmetric Enforcement of Cooperation in a Social Dilemma

We use a public-good experiment to analyze behavior in a decentralized asymmetric punishment institution. The institution is asymmetric in the sense that players differ in the effectiveness of their punishment. At the aggregate level, we observe remarkable similarities between outcomes in asymmetric and symmetric punishment institutions. Controlling for the average punishment effectiveness of the institutions, we find that asymmetric punishment institutions are as effective in fostering cooperation and as efficient as symmetric institutions. At the individual level, we find that players with higher punishment effectiveness contribute similar amounts to the public account, but have higher earnings and punish more than their weak counterparts.

Direct and indirect punishment among strangers in the field

Significance Why do humans cooperate in one-time interactions with strangers? The most prominent explanations for this long-standing puzzle rely on punishment of noncooperators, but differ in the form punishment takes. In models of direct punishment, noncooperators are punished directly at personal cost, whereas indirect reciprocity assumes that punishment is indirect by withholding rewards. To resolve the persistent debate on which model better explains cooperation, we conduct the first field experiment, to our knowledge, on direct and indirect punishment among strangers in real-life interactions. We show that many people punish noncooperators directly but prefer punishing indirectly by withholding help when possible. The occurrence of direct and indirect punishment in the field shows that both are key to understanding the evolution of human cooperation. Many interactions in modern human societies are among strangers. Explaining cooperation in such interactions is challenging. The two most prominent explanations critically depend on individuals’ willingness to punish defectors: In models of direct punishment, individuals punish antisocial behavior at a personal cost, whereas in models of indirect reciprocity, they punish indirectly by withholding rewards. We investigate these competing explanations in a field experiment with real-life interactions among strangers. We find clear evidence of both direct and indirect punishment. Direct punishment is not rewarded by strangers and, in line with models of indirect reciprocity, is crowded out by indirect punishment opportunities. The existence of direct and indirect punishment in daily life indicates the importance of both means for understanding the evolution of cooperation.

Is There Selection Bias in Laboratory Experiments

Do the social and risk preferences of participants in laboratory experiments represent the preferences of the population from which they are recruited? To answer this question, we conducted a classroom experiment with a population of 1,173 students using a trust game and a lottery choice task to measure individual preferences. Separately, all 1,173 students were invited to participate in a laboratory experiment. To determine whether selection bias exists, we compare the preferences of the individuals who eventually participated in a laboratory experiment to those in the population. We find that the social and risk preferences of the students participating in the laboratory experiment are not significantly different from the preferences of the population from which they were recruited. We further show that participation decisions across most subgroups (e.g., men vs. women) do not differ significantly. We therefore fail to find selection bias based on social and risk preferences.

Mixing the Carrots with the Sticks: Third Party Punishment and Reward

While the opportunity to punish selfish and reward generous behavior coexist in many instances in daily life, in most laboratory studies, the demand for punishment and reward are studied separately from one another. This paper presents the results from an experiment measuring the demand for reward and punishment by ‘unaffected’ third parties, separately and jointly. We find that the demand for costly punishment is substantially lower when individuals are also given the ability to reward. Similarly, the demand for costly reward is lower when individuals can also punish. The evidence indicates the reason for this is that costly punishment and reward are not only used to alter the material payoff of others as assumed by recent economic models, but also as a signal of disapproval and approval of others’ actions, respectively. When the opportunity exists, subjects often choose to withhold reward as a form of costless punishment, and to withhold punishment as a form of costless reward. We conclude that restricting the available options to punishing (rewarding) only, may lead to an increase in the demand for costly punishment (reward).

Social comparisons and reference group formation: Some experimental evidence

We investigate reference group formation and the impact of social comparisons on ultimatum bargaining using a laboratory experiment. Three individuals compete in a real-e¤ort task for the role of the proposer in a three-player ultimatum game. The role of the responder is randomly allocated. The third individual receives a ?fixed payment - our treatment variable - and makes no decision. The existence of a non-responder has a dramatic e¤ect on bargaining outcomes. In the most extreme treatment, more than half of the o¤ers are rejected. Behavior shows individuals exhibit self-serving bias in the way they de?ne their reference groups.(This abstract was borrowed from another version of this item.)

In the long-run we are all dead: on the benefits of peer punishment in rich environments

We investigate whether peer punishment is an efficient mechanism for enforcing cooperation in an experiment with a long time horizon. Previous evidence suggests that the costs of peer punishment can be outweighed by the benefits of higher cooperation if (i) there is a sufficiently long time horizon and (ii) punishment cannot be avenged. However, in most instances in daily life, when individuals interact for an extended period of time, punishment can be retaliated. We use a design that imposes minimal restrictions on who can punish whom or when, and allows participants to employ a wide range of punishment strategies including retaliation of punishment. Similar to previous research, we find that, when punishment cannot be avenged, peer punishment leads to higher earnings relative to a baseline treatment without any punishment opportunities. However, in the more general setting, we find no evidence of group earnings increasing systematically or significantly over time relative to the baseline treatment. Our results raise questions under what conditions peer punishment can be an efficient mechanism for enforcing cooperation.

Altruistic punishment does not increase with the severity of norm violations in the field

The degree of human cooperation among strangers is a major evolutionary puzzle. A prominent explanation is that cooperation is maintained because many individuals have a predisposition to punish those violating group-beneficial norms. A critical condition for cooperation to evolve in evolutionary models is that punishment increases with the severity of the violation. Here we present evidence from a field experiment with real-life interactions that, unlike in lab experiments, altruistic punishment does not increase with the severity of the violation, regardless of whether it is direct (confronting a violator) or indirect (withholding help). We also document growing concerns for counter-punishment as the severity of the violation increases, indicating that the marginal cost of direct punishment increases with the severity of violations. The evidence suggests that altruistic punishment may not provide appropriate incentives to deter large violations. Our findings thus offer a rationale for the emergence of formal institutions for promoting large-scale cooperation among strangers.