Counterproductive punishment in closed communities: Experimental evidence from Japanese fishery

Since Hardin (1968) emphasized the fundamental difficulties of common pool re- source (CPR) management, social scientists have been struggling to find a way of mitigating a free-riding problem in social dilemma situations. Empirical evidence based on a public goods experiment demonstrates that introducing a punishment opportunity among subjects successfully solves the free-riding problem. However, few studies investigate whether the effectiveness of such a punishment option varies with community network structures. To examine this aspect, we targeted 10 Japanese fishing communities and conducted public goods games. During the course of the experiments, we exogenously changed the rule of the game and introduced pun- ishment opportunities. Adopting the difference-in-differences strategy, we compare individual contributions between closed and open community structures before and after the introduction of the punishment opportunity. Estimation results find that the punishment option is counterproductive in the closed communities because it crowds out existing cooperative norms. This implies that policies without considering local community structures may exacerbate CPR management problems.