Third party punishment experiments: a modification of the PD
http://www.cell.com/trends/cognitive-sciences/pdf/S1364-6613(04)00050-6.pdf
The Prisoner’s dilemma is a highly theoretical situation and in my opinion, not very applicable. A big problem is that game theory assumes that each player maximizes utility, given the other player’s choices, but the precise definition of utility is lacking. Most game-theory applications assume individuals are rational, self-interested players, which I also feel is not true. As a sociology major, I believe that social forces do have an influence over individual’s actions so that they may not chose action that would maximize utility
Fehr and Fischbacher gave a powerful critique to this. They believe social norms (standards of behavior based on widely shared beliefs of how individual group members ought to behave) can affect individuals’ actions, and individuals may not be interested in maximizing their own utility.
They modified the prisoners’ dilemma and added a third party subject. This person with monetary endowments was informed of the actions of two PD (prison dilemma) players and could chose to sanction any player at the cost of his/her own endowment. The desire to punish norm violations overcomes the third party’s self-interest and the third party subjects punished defecting players even though the experiment is one-shot and players anonymous. These “Third party punishment experiments” proved violations of the norm of cooperation are sanctioned. And people do make actions that do not maximize utility to preserve what they perceive as violations of social norms.