Abstract

Many studies show that punishment, although able to stabilize cooperation at high levels, destroys gains which makes it less efficient than alternatives with no punishment. Standard public goods games (PGGs) in fact show exactly these patterns. However, both evolutionary theory and real world institutions give reason to expect institutions with punishment to be more efficient, particularly in the long run. Long-term cooperative partnerships with punishment threats for non-cooperation should outperform defection prone non-punishing ones. This article demonstrates that fieldwork data from hunter-gatherers, common pool resource management cases and even PGGs support this hypothesis. Although earnings in PGGs with a punishment option may be lower at the beginning, efficiency increases dramatically over time. Most ten-period PGGs cannot capture this change because their time horizon is too short.