Business Economics and Public Policy Papers

Document Type

Journal Article

Date of this Version

2016

Publication Source

Journal of Conflict Resolution

Volume

60

Issue

4

Start Page

670

Last Page

693

DOI

10.1177/0022002714564426

Abstract

Previous findings on punishment have focused on deterministic environments in which the outcomes are known with certainty. In this article, we conduct experiments to investigate how punishment affects cooperation in stochastic social dilemmas where each person can decide whether to cooperate, when the outcomes of alternative strategies are specified probabilistically. Two types of punishment mechanisms are studied: (1) an unrestricted punishment mechanism—both persons can punish—and (2) a restricted punishment mechanism—only cooperators can punish noncooperators. We compare behavior in a two-person deterministic prisoner’s dilemma game (DPD) with a two-person stochastic prisoner’s dilemma (SPD). In all treatments, participants are given information on the other person’s actions. We find that in both games, the restricted punishment mechanism promotes more cooperative behavior than unrestricted punishment. However, the difference in the degree of effectiveness between the two mechanisms is smaller in the SPD game than in the DPD game because noncooperative behavior is less likely to be punished when there is outcome uncertainty. Our findings provide useful information for designing efficient incentive mechanisms to induce cooperation in a stochastic social dilemma environment.

Copyright/Permission Statement

Erte Xiao & Howard Kunreuther,Punishment and Cooperation in Stochastic Social Dilemmas, Journal of Conflict Resolution (Volume 60, Issue 4) pp. 670-693. Copyright © 2016 SAGE. Reprinted by permission of SAGE Publications

Embargo Date

1-5-2016

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Date Posted: 27 November 2017

This document has been peer reviewed.