Punishment and leadership in public goods game.

Abstract

To study the effect of centralized authority in the provision of public goods game, this paper compares 8 treatments by examining: (i) the differences between exogenous leadership and endogenous leadership, (ii) given restricted/free power, whether a leader will abuse power, (iii) the voting pattern in leader selection, and (iv) the impact by introducing sequence in decision making. The experimental results are: (i) There is no significant difference between endogenous and exogenous leadership on the overall contribution level, while the existence of endogenous leadership helps to coordinate members’ contribution in a public goods game (ii) If power is restricted, leaders tend to behave in accordance with self-compliance effect; however, power is likely to be abused when leaders are given the freedom of punishing others, (iii) Group members have a propensity to select the most generous person to be a leader and (iv) In sequential experiment, Pareto efficient optimum is achieved.