Implementing Punishment and Reward in the Public Goods Game: The Effect of Individual and Collective Decision Rules

Abstract

"Sanctions are effective means for establishing cooperation in social dilemmas. We compare a setting where actors individually decide whom to sanction to a setting where sanctions are only executed when actors collectively agree whom to target. Collective decision rules are problematic due to the difficulty of reaching agreement on sanctions. However, when a decision is made collectively, antisocial sanctioning of individual actors is ruled out. Therefore, sanctions implemented through collective decisions are more likely to be in the interest of the whole group. We employ a laboratory experiment where subjects play one-shot Public Goods Games with opportunities for punishment or reward that can be implemented either by an individual, a majority, or unanimously. For both punishment and reward, contribution levels are higher in the individual than the majority condition, and higher under majority than unanimity. Often, majority agreement or unanimity was not reached."