When punishment fails: Research on sanctions, intentions and non-cooperation

Abstract

People can become less cooperative when threatened with sanctions, and previous research suggests both "intentions" and incentives underlie this effect. We report data from an experiment aimed at determining the relative importance of intentions and incentives in producing non-cooperative behavior. Participants play a one-shot investment experiment in pairs. Investors send an amount to trustees, request a return on this investment and, in some treatments, can threaten sanctions to enforce their requests. Decisions by trustees facing threats imposed (or not) by investors are compared to decisions by trustees facing threats imposed (or not) by nature. When not threatened, trustees typically decide to return a positive amount less than the investor requested. When threatened this decision becomes least common. If the request is large relative to the sanction then most trustees return nothing. If the request is small, trustees typically return the requested amount. These results do not vary with investors' intentions. JEL classification: C71; C91

Trustworthiness and Motivations

“…(Note that the proceeds from the fines did not go to the truster, so there was no financial benefit to imposing fines other than any effect on the amount of money sent back.) The threat of sanctions also led to less money being returned when the sanctions were imposed by the experimenter, without the knowledge of the trusters (Houser, Xiao, McCabe, & Smith, 2008). This finding is consistent with a large literature which demonstrates that monetary rewards and punishments sometimes backfire-for instance, payments reduce work effort and the offer of monetary compensation reduces willingness to do civic duty-known as the 'motivation crowding effect' (Frey & Jegen, 2001).…”

“…For instance, in experimental trust games with sanctions, there is no mention of fines or any normative language, only 'conditional payoff cuts' (e.g. Houser, Xiao, McCabe & Smith, 2008). A payoff cut could be seen as a price, not as a punishment.…”

Credible communication and cooperation: Experimental evidence from multi-stage Games

“…To test whether these differences are significant, we start out by using average level of C actions at the session level as observations. Using the Mann-Whitney test, we find that the level of C actions are higher in the 17 Yet another potential explanation of the high number of RR messages is offered in a recent experimental study by Houser, Xiao, McCabe, and Smith (2008). They find a similar pattern in their data and argue that threats create a cognitive shift that crowds-out norm-based motivations for cooperation.…”

Principal–Agent Settings with Random Shocks

“…This is an important omission, because the types of contracts they are concerned with are often difficult to enforce in the real world precisely 4 There is a wealth of experimental evidence that both positive and negative reciprocity have important effects on actions, with negative reciprocity being shown as more salient. In the context of the gift-exchange experiment employed in this paper, see Charness and Haruvy (2002), Charness (2004), Charness and Dufwenberg (2006), Fehr and Schmidt (2007), and Houser at al. (2008).…”