Swords without covenants do not lead to self-governance
| DOI | 10.1177/0951629814539199 |
| Date | 01 January 2016 |
| Published date | 01 January 2016 |
| Subject Matter | Articles |
Article
Journal of Theoretical Politics
2016, Vol.28(1) 44–73
ÓThe Author(s) 2014
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DOI: 10.1177/0951629814539199
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Swords without covenants do
not lead to self-governance
Timothy N Cason
Purdue University, West Lafayette, USA
Lata Gangadharan
Monash University, Melbourne, Australia
Abstract
This paper presents an experimental study of two mechanisms for managing common pool
resources. Decentralized peer punishment (swords) has been shown to increase cooperation in
related social dilemmas, but only with linear private benefits and costs of public goods provision.
We investigate the effectiveness of this mechanism for a more realistic nonlinear public goods
environment, in isolation andin combination with nonbinding communication and informal agree-
ments (covenants). The results show that swords do not increase cooperation or yield from the
public resource, regardless of whether covenants are also possible. Covenants are significantly
more effective in solving the social dilemma, and importantly peer punishment is unnecessary if
communication is possible.
Keywords
Cheap talk; collective action;common pool resources; communication; free rider; peer punish-
ment; social choice
1. Introduction
Social dilemmas arise whenever individuals face a conflict between their personal
interests and what is best for the groups to which they belong (Ostrom, 1990). Such
conflicts can influence behavior across a wide range of economic, political, social
and community life. Research on social dilemmas has sought to identify when
Corresponding author:
Timothy N Cason, PurdueUniversity, 100 S. Grant St., West Lafayette, IN, 47907-2076, USA.
Email: cason@purdue.edu
external and central authorities are needed to coordinate group efforts towards
cooperation, and under what conditions decentralized and peer-based interactions
are sufficient to resolve the conflict between group and individual interests.
Empirical research on social dilemmas has identified the importance of peer
communication (Balliet, 2010), and monitoring and peer punishment (Fehr and
Gaechter, 2000) for improving cooperation without centralized enforcement of
property rights or restricted access to group resources. These decentralized solu-
tions to social dilemmas, such as for the management of common pool resources,
provide hope for economic and political development without formal and imposed
institutions, although researchers have also cautioned that peer-based, local institu-
tions are no panacea (Ostrom et al., 2007). As insights from the academic literature
on social dilemmas are applied to the management of the wide range of relevant
societal problems in practice, it is important to clarify and refine our understand-
ing of the set of environments where different types of decentralized mechanisms
are effective in improving cooperation.
This study reports a laboratory experiment to explore the efficacy of two lead-
ing factors that have been shown to improve cooperation, both in isolation and in
combination, in certain types of social dilemmas: costly peer punishment (swords)
and nonbinding, ‘cheap talk’ communication that often leads to agreements (cove-
nants). Swords, even without covenants, have been shown to improve cooperation
in a variety of experiments following Fehr and Gaechter (2000), but almost entirely
focused on a specific class of social dilemmas with linear private and public bene-
fits. This linear structure leads to privately and socially optimal outcomes that are
at opposite extremes of the range of possible choices. Chaudhuri (2011) provides a
recent review.
In the present study we go beyond this linear setting to consider a variation of a
common pool resource (CPR) environment first studied by Ostrom, Walker and
Gardner (1992), hereafter OWG, who also coined the swords and covenants phras-
ing to refer to these decentralized management mechanisms. This environment fea-
tures more realistic nonlinear payoffs that make privately and socially optimal
outcomes more challenging for participants to identify. Nonlinear payoffs lead to
the individuals’ private interest and the group’s best interest to both have only some
but not all effort exerted towards extracting from the resource or contributing to
the public good.
1
In stark contrast to results from the simplified linear studies that
followed, OWG’s original study employing nonlinear returns found that the threat
and use of swords fails to reliably increase cooperation.
2
Although this study has
been highly influential, this negative result when punishment is used on its own is
often overlooked by contemporary researchers studying peer-punishment impacts.
In comparison with swords, covenants (communication) have been shown to
effectively enhance cooperation in a wider range of social dilemmas. Nevertheless,
relatively free-form communication has its limits even in simplified environments
with linear private and public benefits. Hamman et al. (2011) show that communi-
cation alone does not lead to a sustained increase in cooperation if the returns to
the public good are relatively low. Instead, delegating decisions about public goods
provision to an elected leader is more effective for increasing contributions.
3
Cason and Gangadharan 45
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