The Demand of the Third Party Punishment

Third party punishment is regarded as an essential to the maintenance of social norms. We examine the economic logic underlined third party punishment in a Dictator Game within a real effort context in which dictators(first parties) distribute the outputs of both first parties and second parties. The question is whether the demand of third party punishment obey the Law of Demand. We change the cost of punishment faced by third parties after dictators make their distribution decisions in a series of experiments. The results show third parties are willing to use the costly punishment opportunities. Besides, the level of punishment, on the one hand, is significantly negatively related to the level of price as if punishment is an ordinary good, and on the other hand, is also determined by the extent to which the dictator’s distribution of outputs to himself/herself exceeds his/her own output. We confirm the generality of such relationships by inducing believes of second party on whether third party will punish dictator in a given price level or not. These results show that, there are two different kinds of motivation behind third party punishment, including economic motivation and non-economic motivation. This suggests that we should consider them both when we construct the behavioral models of punishment decision