Learning to Punish: Experimental Evidence from a Sequential Step-Level Public Goods Game

This paper studies how subjects in a three-person sequential step-level public good game learn to punish free riders more over time. Our current work makes several additions to the literature on other regarding behavior. First, our experiment provides evidence that subjects care about the actions that lead to an outcome as well as the outcome itself, replicating the results of Falk, Fehr, and Fischbacher (1999), Brandts and Solà (2000) and Kagel and Wolfe (1999). Second, our experiment provides one of the first tests of the newer theories of reciprocity by Falk and Fischbacher (1998) and Charness and Rabin (2000) that take a psychological games approach. We find that these theories fail to explain the experimental data. Finally, we examine the mechanism by which subjects learn to punish free-riding more often over time. JEL classification: H4, C7, C9