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Punishment and Cooperation in Stochastic Social Dilemmas

Author

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  • Erte Xiao
  • Howard Kunreuther
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.

Suggested Citation

  • Erte Xiao & Howard Kunreuther, 2016. "Punishment and Cooperation in Stochastic Social Dilemmas," Journal of Conflict Resolution, Peace Science Society (International), vol. 60(4), pages 670-693, June.
    • Handle: RePEc:sae:jocore:v:60:y:2016:i:4:p:670-693
    DOI: 10.1177/0022002714564426
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    More about this item

    Keywords

    social dilemmas; uncertainty; punishment; cooperation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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