The name is absent



We recruited 160 subjects through announcements in undergraduate classes at Purdue
University and signed up online. The sessions were run at the Vernon Smith
Experimental Economics laboratory at Purdue University. No eye contact was possible
among subjects, and copies of the instructions were on all desks. Instructions were read
aloud.7 Average earnings were $29.50 per subject. A session lasted on average 110
periods for a running time of 2.5 hours, including instruction reading and a quiz. Details
about the number and length of sessions are provided in Table 3 (each session had 20
participants and 5 cycles).

Table 3: Four experimental treatments

Private monitoring

Anonymous public
monitoring

Private monitoring
with punishment

Public monitoring
(non-anonymous)

Information

No subject IDs;
own and current
opponent’s action

No subject IDs; list of
all 4 group members'
actions in random order

No subject IDs;
own and current
opponent’s actions

Subject IDs are
public; individual
histories of all 4
group members

Punishment

Subjects can only
punish by defecting

Subjects can only
punish by defecting

Subject can pay 5
points to reduce
opponent's payoff
by 10 points

Subjects can only
punish by defecting

Session date

21.4.05

7.9.05

27.4.05       1.9.05

28.4.05

6.9.05

12.4.05

8.9.05

Show-up
fee

$5

$5

0           0

$5

0

0

0

Periods

71

104

129_________125

139

99

86

128

4 Theoretical predictions

We first introduce a theoretical framework for the private monitoring treatment based
on Kandori (1992) and then discuss the other treatments, in particular the private
monitoring with punishment and public monitoring. The analysis is based on the
assumption of identical players, who are self-regarding and risk-neutral, in the absence of
commitment and enforcement.8

7 A copy of the instructions can be found at http://www.mgmt.purdue.edu/faculty/casari/anonymous.htm

8 The theoretical framework is one of a homogeneous population. An alternative approach is to consider
subjects of different types in the experiment as, for example, in Costa- Gomes, Crawford, and Broseta
(2001) and Healy (forthcoming).

10



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