| Abstract: |
This work focuses on costly punishment imposed by unaffected observing third parties in economic experiments. Third-party intervention is applied to enforce social norms in situations in which the retaliation by directly harmed second parties is not possible or sufficient. I provide a coherent overview of recent experimental research, and examine the characteristics of third-party sanctions, socio-cultural variations and underlying motives of punishment behavior. The existence of third-party punishment contradicts the standard economic predictions but is consistent with some theoretical models of social preferences. The experimental results show that third-party punishment is present across societies in strength proportional to the degree of norm violation. Punishment may be an emotional reaction to observed injustices or imposed instrumentally to change the unequal distribution of resources, enhance cooperation and increase social welfare. At the end of the work, I outline an experiment to examine the efficiency of third-party punishment in comparison with the third-party reward on maintenance of cooperation norm. |
