The Carrot or the Stick: Rewards, Punishments and Cooperation

University of Oregon Department of Economics Working Paper No. 2002-1

32 Pages Posted: 11 Nov 2003

See all articles by James Andreoni

James Andreoni

University of California, San Diego (UCSD)

William T. Harbaugh

University of Oregon - Department of Economics; National Bureau of Economic Research (NBER)

Lise Vesterlund

University of Pittsburgh - Department of Economics

Date Written: March 14, 2002

Abstract

We examine demands for 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 x 2 design, the responder is or is not given a costly option of increasing or decreasing the proposer's payout. 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

JEL Classification: DO

Suggested Citation

Andreoni, James and Harbaugh, William T. and Vesterlund, Lise, The Carrot or the Stick: Rewards, Punishments and Cooperation (March 14, 2002). University of Oregon Department of Economics Working Paper No. 2002-1. Available at SSRN: https://ssrn.com/abstract=436500 or http://dx.doi.org/10.2139/ssrn.436500

James Andreoni (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

HOME PAGE: http://econ.ucsd.edu/~jandreon/

William T. Harbaugh

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States
541-346-1244 (Phone)
541-346-1243 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lise Vesterlund

University of Pittsburgh - Department of Economics ( email )

4T18 WW Posvar. Hall
Pittsburgh, PA 15260
United States

HOME PAGE: http://www.econ.iastate.edu/faculty/vesterlund/

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