Economics Insights @ CBS

This article experimentally explores how the enforcement of cooperative behaviour in a social dilemma is facilitated through institutional as well as emotional mechanisms. Recent studies emphasise the importance of anger and its role in motivating individuals to punish free riders. However, we find that anger also triggers retaliatory behaviour by the punished individuals. This makes the enforcement of a cooperative norm more costly. We show that in addition to anger, "social" emotions like guilt need to be present for punishment to be an effective deterrent of uncooperative actions.

We empirically analyze the illicit trade in cultural property and antiques, taking advantage of different reporting incentives between source and destination countries. We thus generate a measure of illicit trafficking in these goods based on the difference between imports recorded in United States' customs data and the (purportedly identical) trade as recorded by customs authorities in exporting countries.

This paper studies the value of external commitment to policy reforms in the case of WTO/GATT accessions. The accessions often entail reforms that go beyond narrowly defined trade liberalization, and have to overcome fierce resistance in the acceding countries, as reflected in protracted negotiations. We study the growth and investment consequences of WTO/GATT accessions, with attention to a possible selection bias. We find that the accessions tend to raise income, but only for those countries that were subject to rigorous accession procedures.