Experiments on punishment and cooperation

Assuming rationality of profit maximising agents, various economic models made specific and testable predictions about human behaviour. These models suggested that costly punishment should be exercised only if future material gains compensate for the incurred costs. The experimental evidence, however, demonstrates that individuals are willing to pay the price to affect the well-being of others even when no pecuniary or reputational benefits can be derived. The robustness of the phenomenon gave rise to a whole strand of literature. New theoretical models were developed to explain the motives behind such behaviour. Moreover, further experimental inquiries have been undertaken both to understand the motivation and other aspects of demand for punishment, such as responsiveness to the price. Economists became interested in punishment not solely due to the inability of standard models to accommodate the evidence obtained in laboratories, but also because of its potential in explaining high cooperation levels in humans societies. It has been demonstrated that under certain conditions the presence of decentralised punishment opportunities in a public goods game can stave off the decay in cooperation levels and even increase them. The current work consists of four original studies on punishment, which organised in three chapters. The first two chapters include systematic studies of the effects of asymmetries in returns from cooperation and punishment power on cooperation levels in a public goods game with an endogenous number punishment stages in each period. One of the treatments allows for multiple concurrent asymmetries to model the presence of dominant individuals that disproportionately benefit from cooperation. In Chapter 1 we demonstrate the negative effects asymmetries have on cooperation and other key parameters. The random assignment to the positions of power is replaced by a contest in Chapter 2. The data suggest that the contest did not change substantially the willingness of participants to accept inequalities in cooperative part of the game. In Chapter 3 two original studies demonstrate that punishment is being used as a means of communication by a considerable number of participants. The second study of this chapter also shows that individuals are ready to pay not only to inform others about the punishment they assigned but also about lack of punishment or even willing to hide own decisions in one-shot interactions