Implementing punishment and reward in the public goods game: the effect of individual and collective decision rules

Abstract

Punishments and rewards are effective means for establishing cooperation in social dilemmas. We compare a setting where actors individually decide whom to sanction with a setting where sanctions are only implemented when actors collectively agree that a certain actor should be sanctioned. Collective sanctioning decisions are problematic due to the difficulty of reaching consensus. However, when a decision is made collectively, perverse sanctioning (e.g. punishing high contributors) by individual actors is ruled out. Therefore, collective sanctioning decisions are likely to be in the interest of the whole group. We employ a laboratory experiment where subjects play Public Goods Games with opportunities for punishment or reward that is 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 on punishments or rewards.