L7: 3rd VS 2nd party punishment games

Question 1

Explain the set-up of the experiment used by Fehr and Fischbacher (2004) to compare 2nd and 3rd party sanctions in the DG?

Answer 1

2 groups: one of As and one of Bs. Standard DG, except Bs given endowment of 50points in stage 2 to punish As:

2nd party: B can punish their specific A

3rd party: B can punish a different A (ie. A’)

Question 2

Explain how Fehr and Fischbacher (2004) prevented strategic interaction between Bs in the DG with SP and TP comparison?

Answer 2

eg. If B punished A’, B’ not allowed to punish A - has to punish a third party such as A’’’ instead

Question 3

Explain how decisions are elicited by Fehr and Fischbacher (2004) to compare 2nd and 3rd party sanctions in the DG?

Answer 3

in TP condition, 3rd party (B) informed how much they received from A, before deciding punishment on A’ - strategy method was used again

ie. they are informed how much they received, then they stated all decisions for all different levels of A’ to B’

in SP, B indicated punishment level for every possible transfer

Question 4

Main findings of Fehr and Fischbacher (2004) TP-SP-DG? (5)

Answer 4

1) Severe sanctions given in both SP and TP treatments
2) Stronger punishments given in SP than TP
3) Punishment very low for transfers>50
4) SP (26% didnt punish) vs TP (39% didnt punish)
5) For transfers<50: SP: (39% punished), TP (26% punished)