Blind justice: An experimental analysis of random punishment in team production

We study the effect of blind punishment in a team production experiment, in which subjects choose non-observable effort levels. In this setting, a random exclusion mechanism is introduced, linked to the normalized group performance (R, from 0 to 1). Every round, each subject is non-excluded from the collective profit with probability R (and with probability 1 - R gets no benefit from the group account). Punishment does not depend on the individual behavior, but the probability of being punished reflects collective performance. As the exclusion probability is computed at the group level, no individual information is needed to implement exclusion. However, the probabilistic punishment risks to be perceived by subjects as procedurally unfair, as all subjects are treated in an identical, non-equitable manner (justice is blind). Our results suggest that random exclusion promotes a significant increase in cooperation. The effect seems to be associated with hot behavioral responses to punishment. However, convergence to full contribution is not observed. (C) 2010 Elsevier B.V. All rights reserved.