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date: 20 January 2020

Human Punishment Behavior

Summary and Keywords

Punishment has been regarded as an important instrument to sustain human cooperation. A great deal of experimental research has been conducted to understand human punishment behavior, in particular, informal peer punishment. What drives individuals to incur cost to punish others? How does punishment influence human behavior?

Punishment behavior has been observed when the individual does not expect to meet the wrongdoers again in the future and thus has no monetary incentive to punish. Several reasons for such retributive punishment have been proposed and studied. Punishment can be used to express certain values, attitudes, or emotions. Egalitarianism triggers punishment when the transgression leads to inequality. The norm to punish the wrongdoers may also lead people to incur costs to punish even when it is not what they intrinsically want to do.

Individuals sometimes punish wrongdoers even when they are not the victim. The motivation underlying the third-party punishment can be different than the second-party punishment. In addition, restricting the punishment power to a third party can be important to mitigate antisocial punishment when unrestricted second-party peer punishment leads to antisocial punishments and escalating retaliation.

It is important to note that punishment does not always promote cooperation. Imposing fines can crowd out intrinsic motivation to cooperate when it changes people’s perception of social interactions from a generous, non-market activity to a market commodity and leads to more selfish profit-maximizing behavior. To avoid the crowding-out effect, it is important to implement the punishment in a way that it sends a clear signal that the punished behavior violates social norms.

Keywords: punishment, social norms, cooperation, conformity, social dilemmas, experimental economics

Introduction

Peoples’ willingness to punish wrongdoers has been argued to play an important role in the evolution of human cooperation and maintaining social orders. Two central questions are what motivates the punishment behavior and how punishment influences cooperative outcomes. Data about punishment in naturally occurring environments can be hard to access or too noisy to provide clean evidence about causality and the underlying behavioral mechanisms. Recent developments in experimental methods provide a useful tool for researchers to control the decision environments and test hypotheses. This article reviews the findings from experimental research that sheds light on the psychological mechanisms underlying punishment behavior and how punishment influences human behavior.

Why Pay Costs to Punish?

The purpose of punishment has long been a central topic among legal scholars and philosophers (Duff & Hoskins, 2018). This body of research has pointed out several justifications for punishment, such as compensation, reform, and protection. For example, punishment can serve to compensate the victims. By transferring resources from the transgressors to the victims, we can effect restorative justice. The relative importance of each justification directs the design of the formal legal institutions. By contrast, behavioral and experimental economics research on costly punishment behavior has been mainly focused on the informal peer punishment, which can also provide insights for legal institutions.

Earlier experimental work on peer punishment has investigated its role in promoting cooperation in social dilemmas, often studied using a public goods game. Participants have to decide how to allocate their endowment between their own individual account and the group account. Any allocation to the group account will benefit every member of the group. However, for the same allocated amount, the individual earns less from the group account compared with his or her individual account. Thus, the scenario reflects a typical social dilemma situation in that one’s self-interest is always best served by allocating all the resources to his or her individual account. However, the group as a whole earns the highest amount if everyone allocates all the endowment to the group account. Data from experiments show that individuals are often willing to pay a cost to punish free-riders (Fehr & Gächter, 2000a; Yamagishi, 1986). The less one contributes, the more she is punished. As a result, groups are often able to achieve a high level of cooperation. While in this case costly punishment can be rationalized by the expected future benefit from a higher cooperation level, punishment behavior is also observed when the punisher does not expect to meet the wrongdoers again in the future. This suggests that punishment is at least partially retributive in that it is used when it cannot help prevent future harm or compensate the victims (in this case the cooperators). This retributive punishment has been observed in many other contexts as well (Baldassarri & Grossman, 2011; Fehr & Fischbacher, 2004; Fehr & Gächter, 2002; Güth, 1995; Henrich et al., 2006; Kurzban, DeScioli, & O’Brien, 2007). Several reasons for retributive punishment have been proposed and studied.

Expressive Function

In addition to imposing a cost on violations, punishment can be used to express certain values, attitudes, or emotions. The expressive function of punishment implies that punishing a wrongdoer does not necessarily require imposing tangible costs on him or her. In a public goods game, for example, participants are willing to pay a cost to simply send disapproval points to the free-riders, even though the disapproval does not reduce the free-riders’ payoffs (Masclet, Noussair, Tucker, & Villeval, 2003).

People are also less likely to pay a cost to impose monetary punishment if they can express negative emotions toward the wrongdoers. In an ultimatum game, a proposer has to decide how to split a given amount of money between herself and the paired responder. The responder can either accept the offer or reject the offer and leave both parties nothing to take home. Numerous studies have shown that responders often reject low offers, especially when the offer is no more than 20% of the given amount. This finding has been constantly used as evidence that people care about fairness and are willing to inflict a cost on the proposer when being treated unfairly, even if it is costly (i.e., tit-for-tat). Xiao and Houser (2005), however, point out that tit-for-tat may not tell the full story and the costly rejection might be the outcome of the fact that it is only way to express the responder’s negative emotion toward the unfair offer. Being treated unfairly can trigger negative emotions (Casari & Luini, 2012; Hopfensitz & Reuben, 2009; Sanfey, Rilling, Aronson, Nystrom, & Cohen, 2003). With or without self-awareness, people often have the desire to express negative emotions when experiencing them. In a standard ultimatum game, the only decision that the responder usually can make is whether to reject or accept the offer. Xiao and Houser (2005) show that when the responders are given an opportunity to write a message to the proposer at the same time as they decide whether to accept the offer, the rejection rate of the unfair offers drops significantly compared with the standard ultimatum game. Most of those messages written to the unfair proposers express negative emotions.

One probable reason why people are willing to replace non-monetary punishment, such as verbal disapproval, with monetary punishment is that showing disapproval can still impose some psychological costs on the offenders. Although it is hard to measure the psychological cost of being subject to disapproval or receiving negative messages, it has been observed that non-monetary punishment indeed helps promote cooperation, which suggests an aversion to receiving disapproval (Ellingsen & Johannesson, 2008a; Masclet et al., 2003). In fact, even the anticipation of receiving a negative response from the other party can deter egocentric behavior (Xiao & Houser, 2009). On the other hand, to promote cooperation, it is probably most effective to combine the monetary penalty together with the non-monetary punishment (Andrighetto et al., 2013; Noussair & Tucker, 2005).

Egalitarianism

People care not only about their own absolute payoff but also how it compares to others’ payoffs (Fehr & Schmidt, 1999). In the ultimatum game, by offering less than half, the proposer earns more than the responder. If the responder rejects the offer, both earn zero, equally. Thus, punishment can be motivated by egalitarianism if the punishment is less costly for the punisher than for the punishee. A concern for egalitarianism can trigger punishment even if the inequality is caused by chance rather than human intentions. For example, Dawes, Fowler, Johnson, McElreath, and Smirnov (2007) conducted an experiment where subjects were given a different amount of endowment randomly assigned by the computer and would then decide whether to pay a cost to decrease or increase others’ payoffs. Thus, no inequality was due to intention. However, the authors report that the relatively poor participants were willing to pay a cost to reduce the rich peers’ earnings. Falk, Fehr, and Fischbacher (2003) show that both the distributional concerns and the attention play a role in the decisions to reject the unfair offers.

It is important to note that egalitarianism-driven punishment does not necessarily mean that the punisher’s ultimate goal of imposing punishment is to achieve equality. In most of the experimental research on punishment, punishment is costly for the punishers. Thus, the amount spent on punishment reveals only punishers’ constrained preference over the punishment outcome. In addition, the cost is always higher for the punishment recipient (a ratio of 1:3 is commonly used). Punishment behavior in this setup thus always reduces inequality and does not tell us what is the preferred outcome that the punishers would want to achieve if there were no constraint. Some experiments studied punishment behavior when the costs on both parties are the same and thus punishment does not reduce inequality (Falk, Fehr, & Fischbacher, 2005). In this case, people still use costly punishment, which suggest that achieving equality is not a necessary condition for inequality-driven punishment to occur. Neural scientists show that people take pleasure in punishing unfair people or seeing unfair people punished (De Quervain et al., 2004; Singer, Seymour, O’Doherty, & Stephan, 2006).

Revenge can be a key motive for punishment decisions (Mocan, 2013). If punishment is largely an emotional act, it seems proper to posit that equality may not even be the preferred ending of the punishers after receiving an unequal outcome. To learn the preference over punishment outcome, Houser and Xiao (2010) conducted a two-stage dictator game. The first stage is a dictator game where a player (the dictator) is given $8 and has to decide how much of the $8 to give to another player (the receiver). Unlike the ultimatum game, the receiver in the dictator game has no decision power and has to accept whatever the dictator offers. In the second stage, the receiver can pay $1 to destroy the dictator’s earnings by any amount she prefers. They find that about 40% of the punishment toward unequal offers are inequality-seeking, in that dictators end up earning less than the receivers after the punishment. The frequency of inequality-seeking punishment goes down to 13% when the unequal split in the first stage is determined by the computer rather than by the dictators. This suggests that inequality-seeking punishment is motivated not only by the unequal distribution of outcomes in the first stage but also by unfair intentions.

Antisocial Punishment

While punishment is often linked to promoting cooperation, recent studies show that unrestricted second-party peer punishment can lead to antisocial punishments and escalating retaliation (Cinyabuguma, Page, & Putterman, 2006; Denant-Boemont, Masclet, & Noussair, 2007; Hermann, Thöni, & Gächter, 2008; Nikiforakis, 2008; Nikiforakis & Engelmann, 2011).

Antisocial punishment occurs when cooperators are punished. In experiments where punishment is allowed, most punishment is targeted at the non-cooperators, yet some amount of antisocial punishment is often observed. Hermann et al. (2008) conducted public goods experiments with punishment opportunities in 16 countries and found widespread existence of antisocial punishment. Their data shows that weak norms of civic cooperation and weak adherence to the rule of law in a country are correlated with the occurrence of antisocial punishment. Antisocial punishment can be a result of revenge against punishers if they are also cooperators. Nikiforakis (2008) examined the effect of punishment mechanisms on cooperation in a public goods game where counter-punishment is explicitly allowed. Specifically, in a public goods experiment where peer punishment is allowed, participants are given the opportunity to reduce the income of the individuals who have punished them previously. The paper reports a significant amount of counter-punishment.

Furthermore, Nikiforakis, Noussair, and Wilkening (2012) show that punishment triggers feuds, especially when there is normative conflict. Again, in a public goods game, to introduce normative conflict two of four group members who perform best in a real effort task receive a higher return from the provision of public goods than their peers. This design creates two potential conflicting norms of contribution: an equal-contributions norm and an equal-earnings norm. The second norm holds that individuals with high returns should contribute more, so that all group members have equal earnings. They find that, compared with the standard public goods game where everyone receives the same return from the public goods, punishment is much more likely to trigger counter-punishment. The cost of feuding fully offsets the welfare gain from greater cooperation that the punishment mechanism yields.

These studies draw attention to the importance of designing restricted punishment mechanisms. Peer punishment can be regulated by predetermined rules (Andreoni & Gee, 2012; Xiao & Kunreuther, 2015; Xiao & Houser, 2011) or voting mechanisms (Ertan, Page, & Putterman, 2009; Kosfeld, Okada, & Riedl, 2009; Noussair & Tan, 2011; Tyran & Feld, 2006) or requiring an approval from a third party (Tan & Xiao, 2012). In addition to these interventions, restricting the punishment power to a third party is suggested to be another solution as their decisions are less selfishly motivated (Carpenter & Matthews, 2010; Herrmann et al., 2008; Jensen, 2010).

Third-Party Punishment

Recent biological evidence on animals indicates that third-party punishment is unique to humans. Even our closest relatives, chimpanzees, do not engage in third-party punishment (Riedl, Jensen, Call, & Tomasello, 2012). Compared to the large literature on second-party punishment, less research is devoted to understanding third-party punishment (Almenberg, Dreber, Apicella, & Rand, 2011; Carpenter & Matthews, 2010, 2012; Chavez & Bicchieri, 2013; Fehr & Fischbacher, 2004; Kurzban et al., 2007; Marlowe et al., 2008; Ottone, Ponzano, & Zarri, 2008; Ouss & Peysakhovich, 2015)

In one of the earliest experimental studies conducted by Fehr and Fischbacher (2004), the authors examine third-party punishment behavior in a one-shot dictator and a prisoner’s dilemma game. They find that a significant number of third parties are willing to incur a cost to punish violations of distributive or cooperative norms, although the punishment is weaker than the second-party punishment.

Carpenter and Matthews (2012) examined third-party punishment in a public goods game. Participants are given the opportunity to punish the members in their own group and/or those in another group. They find that the third-party punishment is driven by both indignation toward norm violation and reciprocity among members of different groups in exchanging gifts of norm enforcement. They also find that while second parties punish to promote conformism, third parties use punishment primarily to promote efficiency.

Tan and Xiao (2018) investigate, in a prisoner’s dilemma game, the relative role of retribution and deterrence in third-party punishment. They compare the punishment decisions when the third party is an individual and when it is a group. Treatments vary on whether the opportunity to punish is given before the game is played (i.e., punishment can have a deterrence effect) or after the game is played (i.e., punishment can only be retributive). The punishment in this setup is not costly for the third party. Instead the second party first indicates whether he or she wants to pay a cost to punish the partner. The third party simply decides whether to approve the request. Without the consideration of the cost, the third parties’ punishment decisions are more likely to be based on their normative view regarding the purpose of punishment. Indeed, in naturally occurring environments, to ensure the justice and legitimization of punishment, the decisions of third parties (e.g., committee members, jury, or judges) often do not have any significant direct impact on their payoffs (Babcock & Loewenstein, 1997; Guala, 2012; Xiao, 2013).

The authors find that group third parties punish differently based on whether the punishment has a possible deterrence effect or is merely retributive. By contrast, individual third parties punish in similar ways in both cases. They also find the third parties reject a significant amount of proposed punishments, and when the third party is a group, the punishment disapproval rate is even higher despite the fact that punishing is a costless decision. This result suggests that third parties may simply not think punishment as the right approach.

Third-party punishment can also be driven by norm conformity when third parties believe punishing wrongdoers is what others think they should do and is also probably what others would do. That is, social norms prescribe punishment. The desire to be respected and evaluated positively, both by others and even oneself, has been argued to provide a unifying interpretation for complex aspects of human pro-social behavior (Akerlof & Kranton, 2000; Andreoni & Bernheim, 2009; Benabou & Tirole, 2006; Ellingsen & Johannesson, 2011; DellaVigna, List, & Malmendier, 2012). The norm to punish the wrongdoers may lead people to incur costs to punish even when it is not what they intrinsically want to do. If one uses punishment reluctantly because of external social pressure rather than out of her intrinsic desire, he or she may avoid carrying out costly punishment when an opportunity arises while nevertheless stating a desire to punish.

Much of the laboratory experiments studying voluntary punishment typically provide decision-makers with clear choices (e.g., how much to punish) and direct mappings from choices into outcomes. Kriss, Weber, and Xiao (2016) conducted variants of a dictator game experiment with punishment opportunities based on Fehr and Fischbacher (2004). The experiment differs from these previous experiments in that it allows the decision-maker to indicate the intention to punish but also subsequently to manipulate the ability to punish without doing so transparently.

Specifically, punishers first decide whether to punish the dictator and by how much. Such “intended” punishment decisions are visible to all relevant parties. But then the punishers are asked to self-report the outcome of a die roll which will determine whether their punishment decisions will be implemented. This design ensures punishers can not only keep the truth secret but also potentially manipulate the truth. A reluctant punisher can first show a desire to punish a transgressor and then misrepresent the outcome of the die roll so as to incur no cost in the end. The data show that, when the dictator acts selfishly, many third parties who express a willingness to engage in costly punishment nevertheless report an odd number outcome of the die roll (about 80% of time) and avoid having to carry out the punishment act. This suggests that much third-party punishment is driven by social obligation. By contrast, second parties (the receivers in the dictator game) show a strong intrinsic desire to punish selfish dictators in that they overreport an even number (about 70% of the time) in order to ensure that the punishment act is carried out.

A social obligation to punish may explain why the frequency of punishment behavior can be sensitive to the social contexts. For example, publicity and anticipated guilt are found to increase third-party punishment behavior (Kurzban et al., 2007; Piazza & Bering, 2008). Opportunities to compensate the victims (Chavez & Bicchieri, 2013) or to withhold help to the transgressors (Balafoutas, Nikiforakis, & Rockenbach, 2014; Nikiforakis & Mitchell, 2014) reduce the frequency of punishment.

Unlike in lab experiments, in naturally occurring environments there are likely to be opportunities for one to manipulate the circumstances and context to avoid any obligation (Dana, Cain, & Dawes, 2006; Dana, Weber, & Kuang, 2007; Lazear, Malmendier, & Weber, 2012). For example, one can simply try not to notice transgressions. This may require additional incentives, such as rewards or legal obligations, to compel people to take costly actions to sanction norm violations. “Good Samaritan” or “duty to rescue” laws may partly be an outcome of peoples’ reluctance to defend social order.

The Effect of Punishment on Conformity

Standard economic theories of punishment have focused on how it can change the payoff of the target behavior and thereby deter violations. Assuming that people seek to maximize their profit, punishment promotes cooperation by increasing the expected cost of non-cooperative behavior (Becker, 1968; Polinsky & Shavel, 2000a). Results from controlled laboratory experiments also provide evidence that introducing punishment institutions can enforce cooperation (Andreoni, Harbaugh, & Vesterlund, 2003; Dickinson, 2001; Fehr & Gächter, 2000; Ostrom, Walker, & Gardner, 1992; Yamagishi, 1986, 1988). According to the normative theory of punishment, we can deter violations by increasing either the probability or the magnitude of punishment so that the expected cost of violation is greater than the benefit. While increasing magnitude is costless, increasing monitoring is expensive. Economic theories of punishment are designed to achieve optimal deterrence of misconduct. In practice, however, people do not seem to believe in optimal deterrence. For example, people do not think the magnitude of the penalty should be increased when the probability of sanction decreases (Sunstein, Schkade, & Kahneman, 2000). As monitoring is always costly, severe sanctions may thus not always be feasible (Polinsky & Shavel, 2000b).1 Indeed, punishment incentives used to promote cooperation in naturally occurring environments are often weak, in the sense that the expected cost of a violation is less than the expected benefit (Tyler, 2006). Experimental research, however, show that weak punishment can backfire.

The Detrimental Effect of Punishment

Gneezy and Rustichini (2000) examine the effect of a small fine introduced at childcare centers aimed at discouraging parents from arriving late to pick up their children. They find that more parents arrived late after the fine was introduced. The detrimental effect of penalty is also observed in other experimental studies (Fehr & Falk, 2002; Fehr & List, 2004; Frey & Oberholzer-Gee, 1997). For example, Fehr and Rockenbach (2003) examine the effect of punishment in a trust game. In this game, an investor decides whether to transfer some, all, or none of her endowment to the matched trustee. Any transferred amount will be tripled and received by the trustee who subsequently decides how much of the tripled amount to return to the investor. Fehr and Rockenbach find that trustees return less on average when investors use sanctions to ensure the trustees return a certain amount. It is worth noting that here the sanction backfires only when the request amount is higher than the sanction amount (i.e., weak punishment).

One possible reason for the negative outcome of penalties is the intention effect. Imposing a fine may affect punishee’s beliefs regarding a punisher’s intention. For example, the punishee may interpret the punishment as a signal that the punisher does not trust her. Humans are strongly disposed to infer intentionality from others’ actions (Gibbs, 1999; Kahneman, Knetsch, & Thaler, 1986; Taylor, 1979). Intention effect has been included in many economic models. For example, Rabin (1993) incorporates the perceived kindness of another into one’s own preferences. A substantial amount of experimental research also suggests that intentions can play an important role in decisions (Blount, 1995; Brandts & Solà, 2001; Charness, 2004; Charness & Haruvy, 2002; Falk, Fehr, & Fischbacher, 2007; Falk et al., 2003; Falk & Kosefeld, 2006; Fehr & Gächter, 2000b; Fehr, Klein, & Schmidt, 2007; Gordon & Bowlby, 1989; Greenberg & Frisch, 1972; McCabe, Rigdon, & Smith, 2003; Nelson, 2002; Offerman, 2002). Imposing punishment may signal distrust (Benabou & Tirole, 2003; Dickinson & Villeval, 2004; Ellingsen & Johannesson, 2008b; Fehr & Falk, 2002; Frey, 1993; Sliwka, 2007; Van Der Weele, 2012) or create a hostile atmosphere (Bewley, 1999) and consequently reduce cooperation.

To examine the role of intention effect in punishment, Houser, Xiao, McCabe, and Smith (2008) compare the trustees’ return behavior between a replication of Fehr and Rockenbach’s (2003) punishment treatment, where the investors decide whether to impose the sanction, and a new treatment, where sanction threats are randomly assigned to trustees by nature. They find that punishment has the same effects on trustees regardless of whether trustees are threatened intentionally by investors or randomly. This suggests that the monetary incentive itself can be detrimental, which points to another possible psychological mechanism underlying the punishment effect. Imposing fines can change people’s perception of social interactions from a generous, non-market activity to a market commodity. While decisions in a non-market environment are more likely to be guided by norms or morality, people tend to engage in cost-benefit calculation when making market decisions. That is, the external monetary incentives crowd out intrinsic motivation to cooperate.

This crowding-out effect of pure incentives has been discussed extensively in the psychology literature. In particular, cognitive dissonance theory (Festinger, 1957) posits that people desire to keep their behavior and beliefs consistent. Absent external incentives, people justify their behavior through an appeal to internal motivations. However, when present, an external incentive can become a salient behavioral justification, and this can, in principle, crowd out norm-based conduct (Deci, Koestner, & Ryan, 1999; Lepper & Greene, 1978). Furthermore, “self-serving bias” can lead individuals’ perceptions of fines to be biased toward self-interest (Babcock & Loewenstein, 1997). When the sanction’s cost is lower than this benefit, it is in one’s best interest not to comply at all. The fine allows an individual to pursue their self-interest without feeling guilty, as she can argue that she has paid the price for her behavior. Tenbrunsel and Messick (1999) propose a similar model of the impact of sanctions that provides similar predictions. Note that, without self-serving bias, the decisions based on external incentives do not necessarily lead to more selfishness as compared to decisions based on intrinsic motivations. As discussed in the next section, one important function of punishment is signaling norm violations. The incentive, even when it is weak, can still be designed to promote conformity if its norm-expressing function is effective. Presumably, self-serving bias is less likely when it is made clear that punished behavior is not socially approved.

Li, Xiao, Houser, and Montague (2009) conducted an fMRI (functional magnetic resonance imaging) study and provide neural data that support this model of incentive effects. Using a similar experimental design as in Houser et al. (2008), they found that the presence of sanctions significantly reduces trustee brain activities involved in social reward valuation (in the ventromedial prefrontal cortex, lateral orbitofrontal cortex, and amygdala) while it simultaneously increases brain activities in the parietal cortex, which has been implicated in rational decision-making.

The detrimental effect of punishment observed in this research raises the question as to why we still observe weak punishment in practice where it seems to be working. One answer can be found in the research on the function of punishment in expressing norms.

Norm Signaling Function of Punishment

Punishment informs violators and the public that the targeted behavior is not approved and that it violates a social norm (Cooter, 1998; Galbiati & Vertova, 2008; Kahan, 1998, Kölle, Lane, Nosenzo, & Starmer, 2019; Masclet et al. 2003; Sunstein, 1996; Tyran & Feld, 2006). For example, laws that forbid text messaging while driving not only increase the cost of disobedience but also signal to the public that using a cell phone while driving is inappropriate and is disapproved by society. The social norms can substantially affect people’s decisions, even when conforming is not in one’s best interest (see Bicchieri, 2006, for its definition and comprehensive discussion). It follows that the norm-expressing function of punishment can have a significant effect on behavior. For example, Galbiati and Vertova (2008) reported data from a public goods experiment supporting the idea that punishment informs people what they should or should not do, and this established obligation has a significant effect on cooperation. The experiment showed that the expressive power of punishment can influence behavior, independent of the incentive mechanism.

The norm-expressing function of punishment argument seems to contradict the crowding-out effect of punishment discussed earlier in this article. To reconcile the contradiction, it is important to consider what conditions can increase the chance that punishment signals norms and thereby decrease the likelihood of punishment being interpreted as the price of non-cooperative behavior (i.e., self-serving biased interpretation). One reason that punishment is perceived as the price of the punished behavior rather than as enforcing norms is that people may view punishment as an instrument that punishers use to further their own self-interest. Such a perception is particularly likely when punishment involves depriving violators of resources they own, such as money or labor, and those resources become revenue for authorities. Xiao (2013) provides experimental evidence indicating that if people know that enforcers can benefit monetarily by punishing, they no longer view punishment as signaling a norm violation.

A straightforward way to enhance the norm-signaling function of punishment is to make it clear that the rule enforced by punishment is the norm to which the majority of the society thinks one should conform rather than some arbitrary request from the punisher. Tyran and Feld (2006) showed that, in a public goods environment, compliance improves greatly when mild punishment is imposed by group members rather than exogenously. This is because voting for punishment expresses support for a cooperation norm. Exogenously imposed punishment, on the other hand, lacks such a signaling function. In related work, Baldassarria and Grossman (2011) conducted a public goods experiment involving 1,543 Ugandan farmers from 50 producer cooperatives to investigate the effectiveness of centralized punishment. In the experiment, after two primary rounds of a public goods game, one player is selected and is given the power to punish group members in the following four rounds. The authors found that when the punisher is selected by the group members, the contribution rate is significantly higher than when the punisher is randomly selected by a lottery. Bicchieri, Dimant, and Xiao (2017) provide more direct evidence that explicitly stating that the enforced rule is the norm can enhance the effect of punishment. Their experiment is built on Fehr and Rockenbach (2003) (see also Houser et al., 2008). They compare trustee’s behavior under the punishment condition when they were also told that most people thought the required amount was what the trustees should return and when this information (normative information) was not provided. They show that while punishment has no impact on returns when the normative information is not provided, it significantly increases returns when normative information is present.

The way punishment is implemented can also amplify the norm-expressing function. Research on social norms points out that a norm might not influence behavior when people are not focusing on the norm (Cialdini, Kallgren, & Reno, 1990). Observing the implementation of the punishment can remind people of the norm to which they should conform. Xiao and Houser (2011) conducted public goods experiments suggesting that publicly implemented punishment can promote the salience of the social norm and therefore is more effective in promoting cooperation than privately implemented punishment, even absent shame and information effects. In each round of the game, participants know that there is a 50% chance that the round will be monitored and, if it is, the one who contributes least to the public account receives a small punishment. The punishment amount is so small that the dominant strategy remains not to invest. The authors compare the outcome of two types of enforcement. In one, punishment is implemented privately so that only the lowest contributor who receives the punishment sees the implementation of punishment. In the other, when punishment is implemented everyone in the group is informed. In both cases, all the decisions are anonymous. Thus, the experimental design ensures that any treatment difference cannot be attributed to shame or differences in information. They find that privately implemented punishment does not increase contribution compared with the baseline (in which a punishment mechanism is not introduced). However, when the same punishment mechanism is implemented publicly, the contribution level is significantly higher than both the baseline and the private punishment treatment. The data suggest that the ability to observe the punishment of free-riders increases the effectiveness of punishment.

While public punishment is often associated with shame, public punishment absent shame is also observed in the real world. For example, to enforce an honor code, many organizations (e.g., West Point and Kellogg Graduate School of Management) announce to the community when an honor-code violation occurs and is punished without revealing the identity of the transgressor. Such public implementation can remind people to follow the norm and thus can enhance the effectiveness of punishment.

Conclusion

Punishment can combat misconduct and enforce social order. However, especially when driven by emotional retaliation, punishment may lead to a downward spiral in cooperation and economic efficiency, as indicated by the evidence of inequality-seeking punishment. The extent to which punishment is present in naturally occurring environments and its role in the evolution of human cooperation remain an open question (Balafoutas & Nikiforakis, 2012; Dreber, Rand, Fudenberg, & Nowak, 2008; Guala, 2012).

The two sides of punishment are probably why institutions are often designed that place certain constraints on peer punishment. A presumably more objective, uninvolved third party is often empowered with the right to decide whether to impose punishment. On the other hand, third parties can be unwilling to punish, even when it is costless. Alternatively, third parties may not think punishment is the best approach to achieving justice. This is consistent with the findings that punishment is much less likely to be applied when there are other instruments to restore justice and maintain social order, such as compensating the victims or rewarding cooperative behavior (e.g., Chavez & Bicchieri, 2013; Fehr & Schmidt, 2007). More research should be conducted to compare alternative instruments that can promote cooperation and investigate how victims and third parties choose between punishment and other instruments to achieve justice.

Another complexity of the punishment mechanism is that it has the potential to crowd out intrinsic motivations to cooperate. An important question is when punishment is more likely to signal norms and when it is more likely to be perceived as the price to violate norms. Fruitful future research would be produced by testing different punishment mechanism designs and identifying the factors that enhance the norm-expressing function of punishment that thereby minimize the chance that punishment is used as an excuse for non-cooperative behavior.

Further Reading

Dawes, C. T., Fowler, J. H., Johnson, T., McElreath, R., & Smirnov, O. (2007). Egalitarian motives in humans. Nature, 446(12), 794–796.Find this resource:

Falk, A., Fehr, E., & Fischbacher, U. (2005). Driving forces behind informal sanctions. Econometrica, 73(6), 2017–2030.Find this resource:

Fehr, E., & Falk, A. (2002). Psychological foundation of incentives. European Economic Review, 46(4–5), 687–724.Find this resource:

Fehr, E., & Rockenbach, B. (2003). Detrimental effects of sanctions on human altruism. Nature, 422(6928), 137–140.Find this resource:

Fehr, E., & Gächter, S. (2000). Fairness and retaliation: The economics of reciprocity. Journal of Economic Perspectives, 14(3), 159–181.Find this resource:

Gneezy, U., & Rustichini, A. (2000). A fine is a price. Journal of Legal Studies, 29(1), 1–17.Find this resource:

Guala, F. (2012). Reciprocity: Weak or strong? What punishment experiments do (and do not) demonstrate. Behavioral and Brain Sciences, 35(1), 1–15.Find this resource:

Herrmann, B., Thöni, C., & Gächter, S. (2008). Antisocial punishment across societies. Science, 319(5868), 1362–1367.Find this resource:

Houser, D., Xiao, E., McCabe, K., & Smith, V. (2008). When punishment fails: Research on sanctions, intentions and non-cooperation. Games and Economic Behavior, 62(2), 509–532.Find this resource:

Kriss, P, Weber, R., & Xiao, E (2016). Turning a blind eye: On the robustness of costly third-party punishment in humans. Journal of Economic Behavior and Organization, 128, 159–177Find this resource:

Kurzban, R., DeScioli, P., & O’Brien, E. (2007). Audience effects on moralistic punishment. Evolution and Human Behavior, 28(215), 75–84.Find this resource:

Li, J., Xiao, E., Houser, D., & Montague, R. (2009). Neural responses to sanction threats in two-party economic exchange. Proceedings of the National Academy of Sciences of the United States of America, 106(39), 16835–16840.Find this resource:

Masclet, D., Noussair, C., Tucker, S., & Villeval, M. (2003). Monetary and non-monetary punishment in the voluntary contributions mechanism. American Economics Review, 93(1), 366–380.Find this resource:

Nikiforakis, N. (2008). Punishment and counter-punishment in public good games: Can we really govern ourselves? Journal of Public Economics, 92(1–2), 91–112.Find this resource:

Nikiforakis, N., & Engelmann, D. (2011). Altruistic punishment and the threat of feuds. Journal of Economic Behavior and Organization, 78(3), 319–332.Find this resource:

Noussair, C., & Tucker, S. (2005). Combining monetary and social sanctions to promote cooperation. Economic Inquiry, 43(3), 649–660.Find this resource:

Sanfey, A. G., Rilling, J. K., Aronson, J. A., Nystrom, L. E., & Cohen, J. D. (2003). The neural basis of economic decision-making in the ultimatum game. Science, 300(5626), 1755–1758.Find this resource:

Sliwka, D. (2007). Trust as a signal of a social norm and the hidden costs of incentive schemes. American Economics Review, 97(3), 999–1012.Find this resource:

Tyran, J., & Feld, L. (2006). Achieving compliance when legal sanctions are non-deterrent. Scandinavian Journal of Economics, 108(1), 135–156.Find this resource:

Xiao, E., & Houser, D. (2005). Emotion expression in human punishment behaviour. Proceedings of the National Academy of Sciences, 102(20), 7398–7401.Find this resource:

Xiao, E., & Houser, D. (2011). Punish in Public. Journal of Public Economics, 95(7–8), 1006–1017.Find this resource:

Xiao, E. (2013). Profit seeking punishment corrupts norm obedience. Games and Economic Behavior, 77(1), 321–344.Find this resource:

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Notes:

(1.) A mechanism based exclusively on severe sanctions would also suffer from an absence of marginal deterrence for serious crimes (see Stigler, 1970).