Redistributive taxation and peer-punishment: disentangling the motivations behind second order social dilemmas

Collaboration with Sergio Lo Iacono & Per Anderson

Inequality aversion, or egalitarian motives, explain punishment through individuals' preference for a more equitable distribution of resources. Fehr and Schmidt (1999) define inequity aversion as follows: “people resist inequitable outcomes; i.e., they are willing to give up some material payoff to move in the direction of more equitable outcomes.” (p.819). Fowler, Johnson, and Smirnov (2005) argue that innate human preferences for equality explains punishment better than negative emotions toward non-contributors. The key element in this explanation is that the goal of punishment behavior is to produce a more equitable distribution of resources, not to foster cooperation or satisfy negative emotions towards defectors.

This argument has received considerable attention in the literature, which shows that egalitarian motives do matter in driving pro-social punishment. Building upon such contributions, we investigate whether a redistributive institutional setting can substitute costly peer-punishment.

Fundings: €1000 won at 2nd Psychological Game Theory Summer School