Third-party punishment and social norms

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Abstract

We examine the characteristics and relative strength of third-party sanctions in a series of experiments. We hypothesize that egalitarian distribution norms and cooperation norms apply in our experiments, and that third parties, whose economic payoff is unaffected by the norm violation, may be willing to enforce these norms although the enforcement is costly for them. Almost two-thirds of the third parties indeed punished the violation of the distribution norm and their punishment increased the more the norm was violated. Likewise, up to roughly 60% of the third parties punished violations of the cooperation norm. Thus, our results show that the notion of strong reciprocity extends to the sanctioning behavior of “unaffected” third parties. In addition, these experiments suggest that third-party punishment games are powerful tools for studying the characteristics and the content of social norms. Further experiments indicate that second parties, whose economic payoff is reduced by the norm violation, punish the violation much more strongly than do third parties.

Introduction

No human societies exist without social norms, that is, without normative standards of behavior that are enforced by informal social sanctions. In fact, the ability to develop and enforce social norms is probably one of the distinguishing characteristics of the human species. It is, therefore, not surprising that social scientists, at least those outside of economics, invoke no other concept more frequently than that of “norms” (Sills, 1968, p. 208). For instance, many ethnographic descriptions contain vivid descriptions of powerful social norms, ranging from norms on mating practices and participation in religious activities to food-sharing norms and people's obligations in cooperative production or defense activities (e.g., Fessler, 2002a, Fessler, 2002b, Gurven, in press, Sober & Wilson, 1997). Even in economics, an increasing number of researchers use this concept to explain important phenomena (e.g., Kandori M., 1992, Lindbeck et al., 1999, Solow, 1990). Thus, it is impossible to understand human societies without an adequate understanding of social norms. Nevertheless, social norms are still poorly understood. Despite some recent progress (Hechter & Opp, 2001), we still know very little about how they are formed, the forces determining their content, how and why they change, their cognitive and emotional underpinnings, how they relate to values, how they shape our perceptions of justice and its violations, and how they are shaped by and shape our neuropsychological architecture. In short, social norms are one of the big unsolved problems in the behavioral sciences.

Social norms are also important for the evolution of human altruism because they have a bearing on the debate between individual and group selection approaches. A key argument against the empirical plausibility of group selection in the evolution of human altruism is that migration between groups removes the differences between groups. If a few selfish individuals join groups that are predominantly composed of altruistic individuals, the selfish individuals will reproduce at a higher rate, quickly removing the differences in the composition of selfish and altruistic individuals across groups. Thus, group selection cannot become operative. However, selfish migrants may not be able to reproduce at a higher rate in the presence of social norms proscribing individually selfish behavior because they are punished for violation of the norm. This means that differences in group composition can be maintained, rendering group selection empirically more plausible Bowles et al., 2003, Boyd et al., 2003, Gintis, 2000, Henrich & Boyd, 2001.

In this paper, we contribute to the understanding of social norms by studying underlying enforcement mechanisms. Norms are enforced due to the expectation that violations of the behavioral standard will be punished. The sanctioning individuals may be “second parties” whose economic payoff is directly affected by the norm violation. For instance, one party in an exchange relationship may violate an implicit agreement, hurting the exchange partner. The cheated partner is the “second party” in this case, while an uninvolved outside party who happens to know that cheating occurred is the “third party.” Thus, the norm violation does not directly affect the third party's economic payoff. However, if only second parties imposed sanctions, a very limited number of social norms could be enforced because norm violations often do not directly hurt other people. In the case of voting norms (Knack, 1992), for example, nobody is directly hurt if somebody does not vote or votes for the “wrong” party. Likewise, in cases of cooperative effort norms, a shirking individual imposes little cost on any particular other individual if work teams are sufficiently large. Thus, third-party sanctions greatly enhance the scope for norms that regulate human behavior. In fact, some researchers view the existence of third-party sanctions as the essence of social norms because second-party punishment strategies are not evolutionarily stable in iterated pairwise interactions, whereas strategies involving third-party sanctions are stable (Bendor & Swistak, 2001). The problem is, however, that there is still relatively little empirical knowledge about third-party sanctions at present. Much of the evidence on third-party sanctions comes from ethnographic descriptions of norm enforcement in small-scale societies (e.g., Cronk et al., 2000, Fessler, 2002a, Sober & Wilson, 1997). Economic historians have also provided accounts of third-party punishment Greif, 1993, Greif, 1994.

Although field evidence on the existence and enforcement of social norms is indispensable and, in fact, motivated our study, isolation of the different forces shaping norm enforcement in the field is extremely difficult if not impossible because too many uncontrolled factors simultaneously affect the results. For example, it is generally impossible in the field to distinguish between reputation-driven third-party sanctions that are motivated by selfish economic benefits and those driven by altruistic goals. However, it is possible to control for these factors in the laboratory, and we therefore examine the characteristics and relative strength of third-party sanctions in the context of laboratory experiments in this paper. We introduce, in particular, a third party into the dictator game (DG) and the prisoners' dilemma (PD) game. The third party observes the actions of the players in the DG and the PD and can then punish them. Punishment is, however, costly for the third party so a selfish third party will never punish. This design is motivated by the idea that social norms apply in both games: a norm concerning distributional fairness in the DG and a cooperation norm in the PD. The notion of strong reciprocity Fehr & Fischbacher, 2003, Fehr et al., 2002, Gintis et al., 2003 implies that the third parties should be willing to punish the violation of these norms. Thus, if we observe punishment of norm violations, we have evidence that strong reciprocity is also relevant for behavior of third parties.

Apart from providing direct insights into the nature of third-party sanctions, our experiments also enable us to evaluate recent theories of social preferences Bolton & Ockenfels, 2000, Dufwenberg & Kirchsteiger, in press, Falk & Fischbacher, 1999, Fehr & Schmidt, 1999, Levine, 1998, Rabin, 1993, which assume various nonselfish preferences with diverse implications for the existence and pattern of third-party sanctions. Finally, one of the most important long-term contributions of our paper may be the provision of a simple yet powerful method for studying the characteristics and content of social norms. Whereas rewards or sanctions by second parties can often be rationalized, or are at least likely to be colored, by egocentric, “nonnormative” motives, the rewards and sanctions of third parties reveal the truly normative standards of behavior. For instance, norm adherence may trigger feelings of gratitude if second parties benefit from the norm adherence in economic terms and this may, in turn, induce second parties to reward those who obey the norm. In this case, the rewarding by the second party cannot be taken as unambiguous evidence for an appreciated behavioral standard. Likewise, if norm violation directly harms someone, his impulse is to retaliate, but retaliation may have nothing to do with his appreciation of behavioral standards. The study of third-party rewards and sanctions can clarify these confounding factors.

The rest of the paper is organized as follows. In the next section, we report the results of third-party sanction in the context of violations of a distribution norm. In Section 3, we deal with the case of cooperation norms, and in 4 Second- versus third-party punishment in the context of a distribution norm, 5 Second versus third-party punishment in the context of cooperation norms, we compare the strength and the pattern of second- and third-party punishment. Section 6 briefly presents questionnaire evidence concerning negative emotions and fairness judgments in relation to the behavioral results, and Section 7 concludes the paper.

Section snippets

Third-party sanctions of violations of a distribution norm

Many experimental economists have studied second-party sanctions in the past decade. The most famous example of such sanctions is probably the ultimatum bargaining game Camerer, 2003, Güth et al., 1982. More recently, the study of second-party sanctions has been extended to gift exchange games (Fehr, Gächter, & Kirchsteiger, 1997), public goods games Fehr & Gächter, 2002, Ostrom et al., 1992, Yamagishi, 1986, and taxation games (Bosman & van Winden, 2002). However, only a few papers report

Methods and experiment design

Our next study assesses whether subjects will punish deviations from cooperation norms. For this purpose, we introduced a third-party punishment option into a PD game, hereafter referred to as TP-PD. As in TP-DG, the TP-PD had two decision stages. In the first, Players A and B were each endowed with 10 points and interacted with each other in a PD: each could keep his points or transfer all 10 to the other, in which case the experimenter tripled them. For example, if A transferred the 10 points

Methods and experiment design

In the DG, second-party punishment means that the recipient, Player B, has the option of punishing the dictator. We developed the following design to compare the relative strength of second- and third-party punishment. At the beginning of the experiment, subjects were randomly assigned either the role of the dictator (Player A) or that of the recipient (Player B). Then we formed groups of two players with each group comprising one Player A and one Player B. The players in these groups then

Methods and experiment design

In order to compare second- and third-party punishment in the PD, we used a similar design to that in the previous section (see Fig. 7). Subjects were randomly assigned to two player groups who played a PD at the first decision stage. This PD was identical to the one in TP-PD. At the beginning of the second decision stage, each player received an additional endowment of 20 points. Then Players A and B could sanction each other in the SP condition, while Player B could only sanction a Player A′

Negative emotions and fairness judgments

Influential social scientists Elster, 1989, Frank, 1988, Hirshleifer, 1987 have argued that the sanctions that enforce social norms are based on strong emotions, and that emotions are the drivers of norm enforcement decisions. Moreover, Elster (1989) argued that being the object of negative emotions such as anger causes a large disutility on its own, independent of any material losses. Therefore, whether cooperating or defecting subjects anticipate the emotions triggered by their behavior is of

Concluding remarks

In this paper, we studied the enforcement mechanisms behind social norms, finding that a large percentage of subjects are willing to enforce distribution and cooperation norms even though they incur costs and reap no economic benefit from their sanctions and even though they have not been directly harmed by the norm violation. Thus, third-party sanctions provide a further important example for the notion of strong reciprocity Fehr & Fischbacher, 2003, Fehr et al., 2002, Gintis et al., 2003. Our

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