Voluntary contributions with redistribution: The effect of costly sanctions when one person's punishment is another's reward

• Subjects contribute more to the public account in the treatment with redistributive punishment.
• Average subject earnings are significantly higher in the treatment with redistributive punishment.
• Making punishment redistributive reduces the share of punishment going to high contributors.
• Most punishers redistribute to high contributors.
• Lower contributors earn more than higher contributors less often in the new treatment.

We introduce new treatments of a voluntary contribution mechanism with opportunities to punish in order to see how contributions, punishments and earnings change when punishment is in the form of fines the punisher distributes to other members of her group. The linked punishment-reward set up is of theoretical interest and could represent simultaneous shifts of social disapproval and approval. Conjectures that punishment will be better targeted, and that it will be more substantial for given deviation from others’ contributions, receive support. Making punishment redistributive increases contributions and efficiency, even after netting out the design's free resource element.