Whistleblowing in Indefinitely Repeated Social Dilemma Games

A large range of socio-economic phenomena require that individuals are willing to cooperate when individual interests and group benefits are at odds and the question of how we can sustain long-run cooperation in infinitely repeated social dilemma situations has been one of the fundamental themes in behavioural economics.

This project considers whistleblowing- a key centralised punishment regime - whereby imposing sanctions for norm violation relies on a central monitor who observes the norm violation, resulting in a direct fine on the person whistleblown. Centralised punishment regimes are not rarely observed in real-life environments. For example, when people drive fast, monetary sanctioning comes from a centralised authority - e.g., the police - not by other members of the society.

The proposed research programme aims at addressing the following research questions:
RQ1: How sensitive are individuals to the cost of whistleblowing in order to sustain cooperative norms?
RQ2: Which strategies do players adopt in the presence of whistleblowing opportunities?
RQ3: How are cooperation norms determined when considering non-monetary (costless) vs. monetary (costly) types of whistleblowing?

Recent experiments explain behaviour by implementing eliciting players' strategies (see Dal Bo & Frechette (2019) and Embrey, Mengel & Peeters (2017)). Both papers find that most subjects rely on strategies such as 'always defect' (static nash), tit-for-tat and grim trigger. In theory, cooperation is also possible to be an equilibrium in a long-run interaction (e.g., see the folk theorems for infinitely repeated framework by Friedman (1971) and subsequent random matching extensions in Kandori (1992) and Ellison (1994)). Given that mutual cooperation is an equilibrium in theory, experimental evidence shows that cooperation may not arise among strangers or partners (Camera & Casari (2009); Dal Bo & Frechette (2011)), raising the question of which strategies players adopt in the presence of whistleblowing.

The main methodology we will employ is theory and experiments. Specifically, it is necessary to define what are unfavorable behaviors to the community and the exact quantity of a fine for a person who is whistleblown.

Existing evidence shows that individuals are concerned about others and others' perceptions about themselves (see Fehr & Fischbacher (2002) for a summary), we therefore formulate the following two hypotheses:
Hypothesis 1: A non-negligible fraction of subjects will blow the whistle on others even when whistleblowing is costly.
Hypothesis 2: Whistleblowing will strengthen the cooperation norms and a high cost will deter whistleblowers from reporting the wrongdoing.

References
Camera, G. & Casari, M. (2009), 'Cooperation among strangers under the shadow of the future', American Economic Review 99(3), 979-1005.
Dal Bo, P. & Frechette, G. (2019), 'Strategy Choice In The Infinitely Repeated Prisoners' Dilemma', American Economic Review 109(11), 3929-3952.
Dal Bo, P. & Frechette, G. (2011), 'The evolution of cooperation in infinitely repeated games: Experimental evidence', American Economic Review 101, 411-429.
Ellison, G. (1994), 'Cooperation in the prisoner's dilemma with anonymous random matching', Review of Economic Studies 61, 567-588.
Embrey, M., Mengel, F. & Peeters, R. (2017), 'Eliciting strategies in indefinitely repeated games of strategic substitutes and complements', Working Paper.
Fehr, E. & Fischbacher, U. (2002), 'Why social preferences matter - the impact of non-selfish motives on competition, cooperation and incentives', The Economic Journal 112(478), 1-33.
Friedman, J. W. (1971), 'A Non-Cooperative Equilibrium for Supergames', Review of Economic Studies 38, 1-12.
Kandori, M. (1992), 'Social norms and community enforcement', Review of Economic Studies 59, 63-80.