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The phenomenon where people are willing to accept a cost to themselves in order to see a rule-breaker penalized is called altruistic punishment.
Altruistic punishment involves individuals accepting expenses, such as a decrease in their own wages or an increase in their workload, in order to hold another person accountable for breaking the law. Altruistic punishment, also known as third-party punishment, is when the transgressor (first party) is punished by a third party who is not directly impacted by the transgression rather than the victim of the transgression (second party).
Third-party sanctions, as opposed to second-party sanctions, have been proposed as the fundamental component of social norms since they are an evolutionary stable tactic. Additionally, it has been demonstrated that costly punishment co-varies with altruistic conduct and that third-party punishments are exhibited in all populations studied, despite the fact that the severity of the punishments varies substantially. Altruistic penalties that are administered to members of one group vs another have been found to differ.
The dictator game and the prisoner's dilemma game are two of the more popular experiments in experimental economics for the study of second-party sanctions with regard to distribution and cooperation norms. With a few adjustments, these games can also be used successfully to analyse altruistic punishments in relation to distribution and cooperation norms.
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