Carrots without Bite: On the Ineffectiveness of ‘Rewards’ in sustaining Cooperation in Social Dilemmas

Rewards are identified as an instrument that promotes cooperation in social dilemmas. All previous experimental studies on this topic use a design that allows for reciprocity with respect to play in the social dilemma, but not for reciprocity to rewards received (for example because interaction is one-shot, or because subject identity labels are randomly reassigned between periods). We introduce the possibility for reciprocity in reward in two ways. First, we use random subject labels but implement two reward stages in every round rather than one. Second, we do not change identity labels between rounds, so that participants can link current rewards to rewards received in previous rounds. The possibility of this reciprocation results in rewards losing effectiveness: the reward focus shifts from enforcing cooperation to establishing mutual exchanges, independent of social dilemma behavior.