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

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.

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

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.

Community Participation with Trust: Evidence from a Framed Lab-in-field Experiment with Hybrid Game Model

Out of the 104 islands of Indian Sundarbans, 54 are inhabited. These islands have mud embankments which protect them from intrusion of river and sea water and have made human settlement possible in these islands. Once the embankments were protected from tidal and storm surges by a layer of mangrove forests. But now the mangrove cover has vanished and consequently the embankments are frequently eroded or develop breaches being directly exposed to tidal and storm surges. One way to protect these mud embankments is to recreate mangrove plantations along the toe-line on the outer side of the embankments. This article uses a framed lab-in-field experiment to measure inclination towards community participation in regenerating common pool resources (CPRs), specifically regeneration of mangrove forest on the outer side of the embankments. The 320 subjects who participated in the experiment were villagers from different islands in the Indian Sundarbans. The experiment is a hybrid of the simple Public Goods Game with Voluntary Contributions Mechanism (VCM) and the Trust Game. The first is used to measure inclination towards contributing resources and effort for generation of CPRs and the second is to see if the participants trust others not to extract from the regenerated CPR and if such trust is reciprocated. The results show that voluntary contributions, contrary to theoretical prediction of free riding, are significantly high, though less than when there is no extraction. Trust levels are also quite high and a third of such trust is reciprocated. JEL Codes: C92, H40, Q23