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State Or Nature? Formal Vs. Informal Sanctioning In The Voluntary Provision Of Public Goods

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Executive Summary

The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be misapplied, but also should have no efficiency benefit under standard assumptions of self-interested agents. The authors experimentally investigate the relative effectiveness of formal vs. informal sanctions in the voluntary provision of public goods.

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