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Social sanctions and informal accountability: Evidence from a laboratory experiment

When public goods are co-produced by citizens and public authorities, problems of free riding and problems of provider accountability frequently coincide. How are voluntary contributions to a public good sustained when they are vulnerable to rent extraction by a third party? In a laboratory experiment, I test whether contributions in a public goods dilemma can be decentrally enforced through costly, mutual sanctioning capacity, even if the contributions can be misappropriated by a third party. I find that costly sanctioning capacity among the beneficiaries of a public good can substantially reduce free riding, without increasing the rate at which contributions are misappropriated by the provider. However, this effect can be undermined if mutual sanctioning capacity exists between the third-party provider and the beneficiaries. Contrary to existing predictions, social sanctioning relationships which both embed the provider and encompass the beneficiaries of a public good are not associated with greater, but partly with lower public goods provision than sanctioning relationships which are only embedding or encompassing.