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

Author

Listed:
  • James Andreoni

    (University of Wisconsin Economics Department)

  • William T. harbaugh

    (University of Oregon Economics Department)

  • Lise Vesterlund

    (University of Pittsburgh 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.

Suggested Citation

  • James Andreoni & William T. harbaugh & Lise Vesterlund, 2002. "The Carrot or the Stick: Rewards, Punishments, and Cooperation," University of Oregon Economics Department Working Papers 2002-01, University of Oregon Economics Department, revised 20 Aug 2002.
    • Handle: RePEc:ore:uoecwp:2002-01
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    JEL classification:

    • D0 - Microeconomics - - General

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Кнут и пряник in Wikipedia Russian
    2. Carrot and stick in Wikipedia English

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