Third-party punishment: Retribution or deterrence?

We conduct an experiment to examine the role of retribution and deterrence in motivating third-party punishment. Specifically, we examine how these two motives may play different roles depending on whether a third party is a group or an individual. In a one-shot prisoner's dilemma game with third-party punishment, we find that groups are more likely to punish when the penalty embeds deterrence rather than mere retribution. By contrast, when individual third parties make punishment decisions, they appear to give little weight to the deterrent effect of the punishment. In general, groups are less likely than individuals to impose punishment, even though the punishment is costless for third parties. However, decision-makers in the prisoner's dilemma game do not distinguish between an individual third party and a group third party.