On Perverse and Second-Order Punishment in Public Goods Experiments with Decentralized Sanctioning

The fact that many people take it upon themselves to impose costly punishment on free riders helps to explain why collective action sometimes succeeds despite the prediction of received theory. But while individually imposed sanctions lead to higher contributions in public goods experiments, there is usually little or no net efficiency gain from them, because punishment is costly and at times misdirected. We document the frequency and probable causes of punishment of high contributors in several recent studies, and we report a new experiment which shows that introducing higher-order punishment opportunities offer a partial solution to the problem, but also reveal the deep-seatedness of retaliatory tendencies.