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 |
Private monitoring |
Public monitoring | ||||
Information |
No subject IDs; |
No subject IDs; list of |
No subject IDs; |
Subject IDs are | |||
Punishment |
Subjects can only |
Subjects can only |
Subject can pay 5 |
Subjects can only | |||
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 |
$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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