NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods?

James Andreoni, Laura K. Gee

NBER Working Paper No. 17033
Issued in May 2011
NBER Program(s):   PE

This paper compares two methods to encourage socially optimal provision of a public good. We compare the efficacy of vigilante justice, as represented by peer-to-peer punishment, to delegated policing, as represented by the "hired gun" mechanism, to deter free riding and improve group welfare. The "hired gun" mechanism (Andreoni and Gee, 2011) is an example of a low cost device that promotes complete compliances and minimal enforcement as the unique Nash equilibrium. We find that subjects are willing to pay to hire a delegated policing mechanism over 70% of the time, and that this mechanism increases welfare between 15% to 40%. Moreover, the lion's share of the welfare gain comes because the hired gun crowds out vigilante peer-to-peer punishments.

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A data appendix is available at http://www.nber.org/data-appendix/w17033

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Document Object Identifier (DOI): 10.3386/w17033

Published: “Gun For Hire: Delegated Enforcement and Peer Punishment in Public Goods Provision.” with Laura K. Gee, Journal of Public Economics, 2012, v. 96, 1036- 1046.

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