exclusively with the members of her economy. By design, cycles for all economies
terminated simultaneously.
Treatments. The experiment consisted of four different treatments that differed in the
availability of information and punishment options (Table 3). All treatments maintained
the same continuation probability, stage game parameters, and matching protocols. Two
treatments were characterized by private monitoring, i.e., subjects could observe actions
and outcomes in their pair, but not the identity of their opponent. One, denoted private
monitoring, was the benchmark case as in Kandori (1992). The other, denoted private
monitoring with punishment, added the possibility of personal punishment. Subjects
could lower the earnings of their opponent, at a cost, after having observed their
opponent’s action. In order to do so, we added a second stage to the one-shot game. The
first stage was the prisoners’ dilemma in Table 2B. In the second stage actions were
revealed, and subjects had the opportunity to pay 5 points to reduce the opponent's
earnings by 10 points. No one could observe any of the actions outside their pair,
including the personal punishment. The remaining two treatments were characterized by
public monitoring, which simply means that every subject could observe the actions
taken in every pair. In one treatment, denoted non-anonymous public monitoring,
histories were associated with identities of subjects. In the remaining treatment, denoted
anonymous public monitoring, subjects observed histories but not identities.
To summarize, the availability of information about actions in the economy was set at
one of three different degrees. First, subjects could be aware only of their own history
(private monitoring, private monitoring with punishment) or of the history of the entire
economy. Second, the history of the economy could be made available at an aggregate
(anonymous public monitoring) or individual level (non-anonymous public monitoring).
The history of the economy was provided at the aggregate level by listing everyone's
actions in random order and without identifiers. On the contrary in the non-anonymous
public monitoring treatment, individual histories were listed with the person's ID as label.
This allowed a subject to inspect the opponent’s actions in previous encounters with her
as well as the opponent’s behavior with others.