Third Party Punishment Under Judicial Review: An Economic Experiment on the Effects of Appeals

This paper analyses, by means of an economic experiment, the impact of (judicial) review on third party punishment. Whereas the existing literature has studied extensively third party costly punishment as such(both by one or two potential punishers), it has not addressed the consequences of a second “vertical” punishment level (i.e. of a “second instance”) on the amount of punishment in the first instance and on the underlying incidence of “crime”. This is the question, we address in this paper, namely to ask, whether and how punishment decisions – and underlying decisions of committing a crime – change, if we allow for a second punisher (an “instance”) competent to confirm or modify, again at a certain positive cost, the punishment decisions previously taken by the first punisher (= first instance). Secondly, we will check whether the presence of the appeal court has a deterrence effect on crime. Finally, we will detect the level of satisfaction of the victims in all scenarios. This study should allow to better understanding to what extent resources spent in appeals lead to a higher quality of the sentences and to a higher level of satisfaction of the victims. Real world applications are, of course, plentiful, covering inter alia the organization of courts and of the appeals process.