Comparing Consequences of Carrots and Sticks on Cooperation in Repeated Public Good Games

Many sociologists and economists have maintained that costly sanctions are able to sustain cooperation, but whether carrots or sticks are more successful in this respect is still under dispute (e.g., Balliet, Mulder, and Van Lange 2011; Rand et al. 2009; Sefton, Schupp, and Walker 2007). Furthermore, while many studies investigated the effects of sanctioning institution on cooperation, the long-term effects of sanctions on group solidarity are largely unexplored. In this chapter, we discuss contrasting hypotheses concerning the effects of positive and negative sanctions on cooperation in Public Good Games and solidarity among the group members. Subsequently, we test these hypotheses by means of a laboratory experiment. Our results show that while carrots do increase cooperation, sticks turn out to be more effective. Concerning group solidarity, we do not find differences in group solidarity depending on the type of sanctions available to the group members. However, we find that actors who receive rewards show higher solidarity towards the group.