The Carrot or the Stick: Rewards, Punishments, and Cooperation

James Andreoni, William T. Harbaugh (bill@harbaugh.org) and Lise Vesterlund
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William T. Harbaugh: University of Oregon Economics Department

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: We examine rewards and punishments in a simple proposer-responder game. The proposer first makes an offer to split a fixed-sized pie. According to the 2×2 design, the responder is or is not given a costly option of increasing or decreasing the proposer's payoff. We find substantial demands for both punishments and rewards. While rewards alone have little influence on cooperation, punishments have some. When the two are combined the effect on cooperation is dramatic, suggesting that rewards and punishments are complements in producing cooperation. Providing new insights to what motivates these demands is the surprising finding that the demands for rewards depend on the availability of punishments.

Keywords: Fairness: Public Goods; Experimental Economics (search for similar items in EconPapers)
JEL-codes: D0 (search for similar items in EconPapers)
Pages: 27
Date: 2002-08-20, Revised 2002-08-20
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp, nep-mic and nep-pub
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Journal Article: The Carrot or the Stick: Rewards, Punishments, and Cooperation (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2002-01

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