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Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation
Experimental Social Science Laboratory, Zhejiang University and Public Administration College, Zhejiang Gongshang University, Hangzhou, China
Department of Economics and Finance, University of Guelph, Guelph, ON, N1G 2W1, Canada
Guanghua Law School, Zhejiang University, Hangzhou, China
Ted Rogers School of Management, Ryerson University, Toronto, ON, M5G 2C5, Canada
Bin Xu is the holder of the grant from the Social Science Experimental Center of Zhejiang University that funded this project. All authors contributed equally to the study.
* Author to whom correspondence should be addressed.
Received: 16 November 2012; in revised form: 29 January 2013 / Accepted: 5 February 2013 / Published: 19 February 2013
Abstract: We examine the effectiveness of the individual-punishment mechanism in larger groups, comparing groups of four to groups of 40 participants. We find that the individual punishment mechanism is remarkably robust when the marginal per capita return (MPCR), i.e. the return to each participant from each dollar that is contributed, is held constant. Moreover, the efficiency gains from the punishment mechanism are significantly higher in the 40-participant than in the four-participant treatment. This is true despite the coordination problems inherent in an institution relying on decentralized individual punishment decisions in the context of a larger group. It reflects increased per capita expenditures on punishment that offset the greater coordination difficulties in the larger group. However, if the marginal group return (MGR), i.e. the return to the entire group of participants, stays constant, resulting in an MPCR that shrinks with group size, no such offset occurs and punishment loses much but not all of its effectiveness at encouraging voluntary contributions to a public good. Efficiency is not significantly different from the small-group treatment.
Keywords: public goods; marginal per capita return; MPCR; punishment mechanism; large groups
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MDPI and ACS Style
Xu, B.; Cadsby, C.B.; Fan, L.; Song, F. Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation. Games 2013, 4, 89-105.
Xu B, Cadsby CB, Fan L, Song F. Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation. Games. 2013; 4(1):89-105.
Xu, Bin; Cadsby, C. B.; Fan, Liangcong; Song, Fei. 2013. "Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation." Games 4, no. 1: 89-105.