Free-Riding on Altruistic Punishment? An Experimental Comparison of Third-Party-Punishment in a Stand-Alone and in an In-Group Environment

This paper deals with the subject of third-party punishment. The paper compares, by means of an economic experiment, punishment by a third party (Stand-Alone case) with punishment by third parties (In-Group environment). This deliberate introduction of a second potential punisher is neither subtle nor marginal. Shifting punishment choices into this “enlarged environment” allows us to study, in a systematic way, the complex relationship between the punisher’s expectations about her/his peer’s punishment decisions and her/his own punishment choices. In particular, we aim to examine whether, on average, individual punishment is systematically lower in an In-Group environment compared with the Stand-Alone case. Our data suggest individual punishers are heterogeneous as to their individual punishment characteristics and to the degree by which the presence of a second punisher affects their choices. The implementation of voluntary punishment depends on the distribution of types within the population. This result is relevant. It allows both to put into discussion the extreme emphasis devoted to voluntary third-party punishment as the “golden cornerstone” of spontaneous social order and to give much more relevance to institutional legal systems as the root of stability