Matching technology and the choice of punishment institutions in a prisoner’s dilemma game

We experimentally investigate the effect of endogenous matching within a segmented population on peoples’ willingness to cooperate as well as their attitudes towards cooperative norms. In the experiment participants can repeatedly choose between two groups, where in one of them a (local) punishment institution fosters cooperation. The degree of population viscosity (i.e. the extent to which matching is biased towards within-group interactions) is varied across treatments. We find that both, the share of participants that choose into the group with the punishment institution and the share of participants that cooperate, increase monotonically with the degree of population viscosity. Furthermore – with higher population viscosity – significantly more subjects claim to support a punishment institution in a post-experimental questionnaire.

Research Highlights
► In a segmented population people voluntarily participate in a local punishment institution if interaction with outsiders is unlikely enough.
► Self selection into institutions can sustain cooperation if population viscosity is high enough.
► A punishment institution that successfully implements cooperative behavior shifts the agents’ attitudes towards norm enforcement.