Exit, punishment and rewards in commons dilemmas: an experimental study

Commons dilemmas are interaction situations where a common good is provided or exploited by a group of individuals so that optimal collective outcomes clash with private interests. Although in these situations, social norms and institutions exist that might help individuals to cooperate, little is known about the interaction effects between positive and negative incentives and exit options by individuals. We performed a modified public good game experiment to examine the effect of exit, rewards and punishment, as well as the interplay between exit and rewards and punishment. We found that punishment had a stronger effect than rewards on cooperation if considered by itself, whereas rewards had a stronger effect when combined with voluntary participation. This can be explained in terms of the 'framing effect', i.e., as the combination of exit and rewards might induce people to attach higher expected payoffs to cooperative strategies and expect better behaviour from others.