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Promoting Cooperation: the Distribution of Reward and Punishment Power

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  • Daniele Nosenzo

    (School of Economics, University of Nottingham)

  • Martin Sefton

    (School of Economics, University of Nottingham)

Abstract

Recent work in experimental economics on the effectiveness of rewards and punishments for promoting cooperation mainly examines decentralized incentive systems where all group members can reward and/or punish one another. Many self-organizing groups and societies, however, concentrate the power to reward or punish in the hands of a subset of group members (‘central monitors’). We review the literature on the relative merits of punishment and rewards when the distribution of incentive power is diffused across group members, as in most of the extant literature, and compare this with more recent work and new evidence showing how concentrating reward/punishment power in one group member affects cooperation.

Suggested Citation

  • Daniele Nosenzo & Martin Sefton, 2012. "Promoting Cooperation: the Distribution of Reward and Punishment Power," Discussion Papers 2012-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    • Handle: RePEc:not:notcdx:2012-08
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    Cited by:

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    2. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2016. "Discretionary Sanctions and Rewards in the Repeated Inspection Game," Management Science, INFORMS, vol. 62(2), pages 502-517, February.
    3. Choi, Jung-Kyoo & Ahn, T.K., 2013. "Strategic reward and altruistic punishment support cooperation in a public goods game experiment," Journal of Economic Psychology, Elsevier, vol. 35(C), pages 17-30.
    4. Daniela Grieco & Marco Faillo & Luca Zarri, 2013. "Top Contributors as Punishers," Working Papers 24/2013, University of Verona, Department of Economics.
    5. Dong, Lu & Falvey, Rod & Luckraz, Shravan, 2019. "Fair share and social efficiency: A mechanism in which peers decide on the payoff division," Games and Economic Behavior, Elsevier, vol. 115(C), pages 209-224.
    6. Mekvabishvili, Rati, 2023. "Decentralized or Centralized Governance in Social Dilemmas? Experimental Evidence from Georgia," MPRA Paper 117811, University Library of Munich, Germany.
    7. Kirchkamp, Oliver & Mill, Wladislaw, 2020. "Conditional cooperation and the effect of punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 150-172.
    8. Rod Falvey & Tom Lane & Shravan Luckraz, 2022. "On a mechanism that improves efficiency and reduces inequality in voluntary contribution games," Discussion Papers 2022-15, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

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    Keywords

    rewards; punishment; discretionary incentives; decentralized incentives; peer-to-peer incentives; centralized incentives; experiment;
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