Gun For Hire: Does Delegated Enforcement Crowd out Peer Punishment in Giving to Public Goods?
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.
We would like to thank our colleagues at UCSD, participants in the Social Dilemmas Conference, participants at the ESA 2010 Conference, participants at the SWET 2011, Simon Gachter, Nikos Nikiforakis, and Anya Savikhina for helpful comments during the writing of this paper. Andreoni also gratefully acknowledges the National Science Foundation, grant 1024683, for financial support. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
“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.