Why are Spectators so Indifferent?
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| Title | Why are Spectators so Indifferent?
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| Author | Fan Liangcong, Liu Lu and Liang Jie |
| Organization | Guanghua Law School, Zhejiang University; Colledge of Economics, Zhejiang University; Department of Economics, Monash University |
| Email | flc1984@163.com,lulumail@vip.qq.com,jie.liang@monash.edu |
| Key Words | Third Party Punishment; The Law of Demand; Social Preference; Real Effort; Experiment |
| Abstract | Third party punishment is regarded as an essential to the maintenance of social norms. We examine the economic logic underlying third party punishment in a Dictator Game within a real effort context in which dictator (first party) allocate the outputs of both first party and second party. The question is whether the demand of third party punishment obeys the Law of Demand. We varied the cost of punishment faced by third parties after dictators made their allocation decisions in a series of experiments. The results show that the third parties are willing to use the costly punishment opportunities. Besides, the level of punishment, on the one hand, is significantly negatively related to the level of price, suggesting punishment is an ordinary good, and on the other hand, is also determined by the extent to which the dictator’s distribution of outputs to himself/herself exceeds his/her own output. We further confirm the generality of such relationships by inducing believes of second parties on whether third party would punish dictators in a given price level or not. These results show that, there are two kinds of forces underlying third party punishment, namely, economic force and non-economic force. We should consider them both when we construct the behavioral models of punishment decision. |
| Serial Number | WP416 |
| Time | 2013-02-21 |
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