We investigate the endogenous formation of sanctioning institutions supposed to improve efficiency in the voluntary provision of public goods. Our paper parallels Markussen et al. (Rev Econ Stud 81:301–324, 2014) in that our experimental subjects vote over formal versus informal sanctions, but it goes beyond that paper by endogenizing the formal sanction scheme. We find that self-determined formal sanctions schemes are popular and efficient when they carry no up-front cost, but as in Markussen et al. informal sanctions are more popular and efficient than formal sanctions when adopting the latter entails such a cost. Practice improves the performance of sanction schemes: they become more targeted and deterrent with learning. Voters’ characteristics, including their tendency to engage in perverse informal sanctioning, help to predict individual voting.

Accountability—the expectation on the side of the decision maker that she may have to justify her decisions in front of somebody else—has been found by psychologists to strongly influence decision-making processes. The awareness of this issue remains however limited amongst economists, who tend to focus on the motivational effects of financial incentives. Accountability and incentives may provide different motivations for decision makers, and disentangling their effects is thus important for understanding real-world situations in which both are present. Separating accountability and incentives, I find different effects. Accountability is found to reduce preference reversals between frames, for which incentives have no effect. Incentives on the other hand are found to reduce risk seeking for losses, where accountability has no effect. In a choice task between simple and compound events, accountability increases the preference for the normatively superior simple event, while incentives have a weaker effect going in the opposite direction.

Ostracism is practiced by virtually all societies around the world as a means of enforcing cooperation. In this paper, we use a public goods experiment to study whether groups choose to implement an institution that allows for the exclusion of members. We distinguish between a costless exclusion institution and a costly exclusion institution that, if chosen, reduces the endowment of all players. We also provide a comparison with an exclusion institution that is exogenously imposed upon groups. A significant share of the experimental groups choose the exclusion institution, even when it comes at a cost, and the support for the institution increases over time. Average contributions to the public good are significantly higher when the exclusion option is available, not only because low contributors are excluded but also because high contributors sustain a higher cooperation level under the exclusion institution. Subjects who vote in favor of the exclusion institution contribute more than those who vote against it, but only when the institution is implemented. These results are largely inconsistent with standard economic theory but can be better explained by assuming heterogeneous groups in which some players have selfish and others have social preferences.

Recently, social science research replicability has received close examination, with discussions revolving around the degree of success in replicating experimental results. We lend insight to the replication discussion by examining the quality of replication studies. We examine how even a seemingly minor protocol deviation in the experimental process (Camerer et al. in Science 351(6280):143–1436, 2016. https://doi.org/10.1126/science.aaf0918), the removal of common information, can lead to a finding of “non-replication” of the results from the original study (Chen and Chen in Am Econ Rev 101(6):2562–2589, 2011). Our analysis of the data from the original study, its replication, and a series of new experiments shows that, with common information, we obtain the original result in Chen and Chen (2011), whereas without common information, we obtain the null result in Camerer et al. (2016). Together, we use our findings to propose a set of procedure recommendations to increase the quality of replications of laboratory experiments in the social sciences.

This paper studies the vulnerability of the pivotal mechanism with respect to manipulation by groups. In a lab experiment, groups decide on the implementation of various alternatives, some of which imply opposite interests for the two subgroups. We investigate the occurrence of tacit and explicit collusion by allowing for communication within subgroups in one treatment and prohibiting it in another. Even though all agents’ preferences are common knowledge and there exists a simple symmetric collusive strategy for one subgroup, we find little evidence for tacit collusion. Only when explicit communication is allowed, collusion is established. A behavioral model using quantal response equilibrium in which subjects have beliefs over the correlation of errors of same-type subjects helps explain the main features of our data.

We experimentally investigate the effect of pre-bargaining communication on productive incentives in a multilateral bargaining game with joint production under two conditions: observable and unobservable investments. In both conditions, communication fosters fair sharing and is rarely used to pit individuals against each other. Proportional sharing arises with observable investments with or without communication, leading to high efficiency gains. Without investment observability, communication is widely used to truthfully report investments and call for equitable sharing, allowing substantial efficiency gains. Since communication occurs after production, our results highlight a novel indirect channel through which communication can enhance efficiency in social dilemmas. Our results contrast with previous findings on bargaining over an exogenous fund, where communication leads to highly unequal outcomes, competitive messages, and virtually no appeals to fairness.

Online labor markets provide new opportunities for behavioral research, but conducting economic experiments online raises important methodological challenges. This particularly holds for interactive designs. In this paper, we provide a methodological discussion of the similarities and differences between interactive experiments conducted in the laboratory and online. To this end, we conduct a repeated public goods experiment with and without punishment using samples from the laboratory and the online platform Amazon Mechanical Turk. We chose to replicate this experiment because it is long and logistically complex. It therefore provides a good case study for discussing the methodological and practical challenges of online interactive experimentation. We find that basic behavioral patterns of cooperation and punishment in the laboratory are replicable online. The most important challenge of online interactive experiments is participant dropout. We discuss measures for reducing dropout and show that, for our case study, dropouts are exogenous to the experiment. We conclude that data quality for interactive experiments via the Internet is adequate and reliable, making online interactive experimentation a potentially valuable complement to laboratory studies.

We conduct laboratory experiments for the multi-unit Vickrey auction with and without advice to subjects on strategy-proofness. The rate of truth-telling among the subjects without advice stays at 20%, whereas the rate increases to 47% among those who have received advice. By conducting similar experiments for the pay-your-bid auction, which is not strategy-proof, we confirm that the increase in truth-telling is due significantly to the net advice effect (i.e., the effect beyond the so-called experimenter demand effect). Moreover, we find that providing advice improves efficiency in the Vickrey auction, particularly in the early periods, when the subjects are less experienced. In general, subjects tend to overbid in Vickrey auction experiments. Our results indicate the possibility that providing simple advice decreases such overbidding by promoting a better understanding of the strategy-proofness of the Vickrey auction. Strategy-proof mechanisms are sometimes criticized because players often fail to recognize the benefit of telling the truth. However, our observations show that introducing advice on the property of strategy-proofness helps them behave “correctly.”

This paper extends the research on incentive compatible institutions for the provision of public goods by imposing a minimum contribution that must be met in order for an individual to enjoy the benefits of the public good. Excluding individuals who do not contribute at least the minimum transforms the linear n-player pure public goods game to an n-player coordination game with multiple, Pareto-ranked Nash equilibria. The experimental results show that exclusion increases contributions to the public good in most cases. However, an increase in contributions may not be sufficient to increase social welfare because there is a welfare cost to excluding individuals when the good is non-rival. Furthermore, exclusion can decrease both contributions and welfare in environments in which individuals fail to coordinate their contributions. The results are sensitive to the minimum contribution requirement and to the relative returns from the public and private alternatives.

Recent experiments have shown that voluntary punishment of free riders can increase contributions, mitigating the free-rider problem. But frequently punishers punish high contributors, creating “perverse” incentives which can undermine the benefits of voluntary punishment.

In our experiment, allowing punishment of punishing behaviors reduces punishment of high contributors, but gives rise to efficiency-reducing second-order “perverse” punishment. On balance, efficiency and contributions are slightly but not significantly enhanced.

We design a lab-in-the-field experiment involving naturally occurring groups operating in three South-African townships. We introduce an incentives-based mechanism named “participatory incentives” consisting of monetary incentives that are awarded conditional on the group reaching a threshold of minimum level of joint contribution to a common project or good. We show that participatory incentives significantly raise average contribution levels (from 29 to 62% of the endowment) and are even more effective in the presence of highly deprived people. We complement the reduced form estimations of the experimental data with a structural model that sheds light on the role of subjects’ beliefs and responsiveness to a social norm of high cooperation.

This paper examines the concept of decentralised autonomous organisations (DAOs), blockchain-based entities intended to operate without central authority or management hierarchy, through the lens of organisational economics. It compares DAOs with conventional organisational forms and explores whether DAOs represent a novel organisational form. The paper investigates DAOs in the context of the electronic markets hypothesis and applies theories from Demsetz, Jensen and Meckling, and Williamson to understand their potential long-term viability. A key finding is that for DAOs to function as claimed, they must effectively suppress agency costs through smart contracts and internal contestable markets. The paper also highlights the challenges DAOs face in maintaining adaptive integrity and fostering cooperative adaptation. While DAOs show promise in reducing certain transaction and information costs, their long-term viability depends on overcoming significant governance and participation hurdles.

The presence of monitoring institutions affects quality and effort of leaders. We investigate the effect of intensified monitoring on the ability and effort of leaders for a sample of forest user groups in Ethiopia, and find experimental and non-experimental evidence of an important trade-off: monitoring increases leaders' effort but lowers their quality in terms of education and experience. This effort–ability trade-off only occurs in the presence of alternative income opportunities (affecting the opportunity cost of time) and only among a subsample of leaders with low prosocial motivation. For our context, we document that the net effect of monitoring on economic outcomes is positive.

The article addresses how merchants and wine producers interacted while oscillating between competition and collaboration in their internal relations. Spanning a period of more than a century, it addresses three chronological periods: 1900–1940, 1940–1994, and 1994 to the present. In the first, producers were able to forge a common front against the merchants in the shape of the Koöperatieve Wynbouwers Vereniging van Suid-Afrika, which was granted devolved regulatory powers over distilling wine in 1924 and then all wine in 1940. In the second, the antagonism between good and distilling producers was sublimated at a time of relative prosperity, while the merchants engaged in fierce competition. In the final phase, the regulatory system imploded while the export market re-emerged. Quality producers found common ground in appealing to terroir, whereas marginal producers supplied merchants and supermarkets with low-priced bulk wines.

We propose to establish wine rankings using scores that depend on the differences between favorable and unfavorable opinions about each wine, according to the Borda rule. Unlike alternative approaches and specifications, this method is well-defined even if the panelists’ quality relations are not required to exhibit demanding properties such as transitivity or acyclicity. As an illustration, we apply the method to rank wines assessed by different experts and compare the resulting ranking with that obtained according to Condorcet's method of majority voting.

Trust is considered an important factor for successful collective action in groups of smallholder farmers. A prime example is collective commercialization of agricultural produce through producer organizations. While previous research has focused on trust as an exogenous determinant of participation in groups, this article tests whether trust within existing groups can be improved using a training program. We conduct a cluster-randomized controlled trial in rural Senegal to identify the effects of training members and/or leaders with respect to commercialization on intragroup trust. Our design allows identifying both direct treatment effects of having participated in the training and spillover effects on farmers who did not partake. Looking at different measures of trust in leaders’ competence and motives and of trust in members, we find that participating in the training significantly enhances both trust in leaders and trust in members. For trust in leaders, we also find a strong spillover effect. Our findings suggest that relatively soft and noncostly interventions such as group training appear to positively affect trust within producer organizations.

The Amish collective objection to high school education and refusal to comply with compulsory schooling laws can be interpreted with a religious-club-good framework. According to the religious-club interpretation, the Amish use the restriction on secular education as a religious prohibition and sacrifice to improve the welfare of sect members. I exploit the 1972 U.S. Supreme Court's decision in Wisconsin vs. Yoder, which exempts Amish children from compulsory high school education, as a policy shock to test several key predictions of the religious-club explanations. The evidence suggests that the successful restriction on high school education helped the Amish sect exclude individuals with low religious participation, lower members' shadow cost of time, and grow the sect through higher fertility.

The voting paradox occurs when a democratic society seeking to aggregate individual preferences into a social preference reaches an intransitive ordering. However it is not widely known that the paradox may also manifest for an individual aggregating over attributes of risky objects to form a preference over those objects. When this occurs, the relation ‘stochastically greater than’ is not always transitive and so transitivity need not hold between those objects. We discuss the impact of other decision paradoxes to address a series of philosophical and economic arguments against intransitive (cyclical) choice, before concluding that intransitive choices can be justified.

Unanimity on the question of UK exit from the EU is not within reach, but this does not mean that the House of Commons or the population at large can not find a way out of the current Brexit impasse that is fair and legitimate. We discuss different voting procedures which satisfy some important principles of democracy and which can select the option that can win a majority against all other alternatives in a head-to-head majority vote. We argue that strategic considerations play an important role and we propose a procedure that works well and can help break the impasse when voters act strategically. The procedure requires (1) that all options with some minimum support are on the agenda, (2) that voting takes place in multiple rounds and (3) that in each round the alternative with the least support is eliminated until in the last round only two alternatives are left and the majority winner is selected. We discuss how this procedure can be modified to take into account that some voters may vote non-strategically and how it, in practice, could be used either in the House of Commons or in a new referendum.

Total fertility in the Catholic countries of Southern Europe has dropped to remarkably low rates (=1.4) despite continuing low rates female labor force participation and high historic fertility. We model three ways in which religion affects the demand for children – through norms, market wages, and childrearing costs. We estimate these effects using new panel data on church attendance and clergy employment for 13 European countries from 1960 to 2000, spanning the Second Vatican Council (1962–65). Using nuns per capita as a proxy for service provision, we estimate fertility effects on the order of 300 to 400 children per nun. Moreover, nuns outperform priests as a predictor of fertility, suggesting that changes in childrearing costs dominate changes in theology and norms. Reduced church attendance also predicts fertility decline, but only for Catholics, not for Protestants. Service provision and attendance complement each other, a finding consistent with club models of religion.