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Games 2013, 4(1), 89-105; doi:10.3390/g4010089

Group Size, Coordination, and the Effectiveness of Punishment in the Voluntary Contributions Mechanism: An Experimental Investigation

1
Experimental Social Science Laboratory, Zhejiang University and Public Administration College, Zhejiang Gongshang University, Hangzhou, China
2
Department of Economics and Finance, University of Guelph, Guelph, ON, N1G 2W1, Canada
3
Guanghua Law School, Zhejiang University, Hangzhou, China
4
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 / Revised: 29 January 2013 / Accepted: 5 February 2013 / Published: 19 February 2013
View Full-Text   |   Download PDF [308 KB, 22 March 2013; original version 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 public goods; marginal per capita return; MPCR; punishment mechanism; large groups
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

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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.

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