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Endogenous rewards promote cooperation

Author

Listed:
  • Chun-Lei Yang

    (Economics Experimental Lab, Nanjing Audit University, Nanjing, 211815 Jiangsu, China)

  • Boyu Zhang

    (Laboratory of Mathematics and Complex Systems, Ministry of Education, School of Mathematical Sciences, Beijing Normal University, 100875 Beijing, China)

  • Gary Charness

    (Department of Economics, University of California, Santa Barbara, CA 93106)

  • Cong Li

    (Département de Mathématiques et de Statistique, Université de Montréal, Montréal, QC H3C 3J7, Canada)

  • Jaimie W. Lien

    (Department of Decision Sciences and Managerial Economics, The Chinese University of Hong Kong, 999077 Hong Kong, China)

Abstract

Sustaining cooperation in social dilemmas is a fundamental objective in the social and biological sciences. Although providing a punishment option to community members in the public goods game (PGG) has been shown to effectively promote cooperation, this has some serious disadvantages; these include destruction of a society’s physical resources as well as its overall social capital. A more efficient approach may be to instead employ a reward mechanism. We propose an endogenous reward mechanism that taxes the gross income of each round’s PGG play and assigns the amount to a fund; each player then decides how to distribute his or her share of the fund as rewards to other members of the community. Our mechanism successfully reverses the decay trend and achieves a high level of contribution with budget-balanced rewards that require no external funding, an important condition for practical implementation. Simulations based on type-specific estimations indicate that the payoff-based conditional cooperation model explains the observed treatment effects well.

Suggested Citation

  • Chun-Lei Yang & Boyu Zhang & Gary Charness & Cong Li & Jaimie W. Lien, 2018. "Endogenous rewards promote cooperation," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 115(40), pages 9968-9973, October.
    • Handle: RePEc:nas:journl:v:115:y:2018:p:9968-9973
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    Citations

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    Cited by:

    1. Cason, Timothy N. & Tabarrok, Alex & Zubrickas, Robertas, 2021. "Early refund bonuses increase successful crowdfunding," Games and Economic Behavior, Elsevier, vol. 129(C), pages 78-95.
    2. Zhang, Boyu & An, Xinmiao & Dong, Yali, 2021. "Conditional cooperator enhances institutional punishment in public goods game," Applied Mathematics and Computation, Elsevier, vol. 390(C).
    3. Maoliang Ye & Jie Zheng & Plamen Nikolov & Sam Asher, 2020. "One Step at a Time: Does Gradualism Build Coordination?," Management Science, INFORMS, vol. 66(1), pages 113-129, January.
    4. Jinhua Zhao & Xianjia Wang & Cuiling Gu & Ying Qin, 2021. "Structural Heterogeneity and Evolutionary Dynamics on Complex Networks," Dynamic Games and Applications, Springer, vol. 11(3), pages 612-629, September.
    5. He, Jialu & Wang, Jianwei & Yu, Fengyuan & Chen, Wei & Xu, Wenshu, 2022. "The persistence and transition of multiple public goods games resolves the social dilemma," Applied Mathematics and Computation, Elsevier, vol. 418(C).
    6. Bao, Te & Liang, Bin & Pei, Jiaoying, 2022. "Does ethnic diversity always undermine pro-social behavior? Evidence from a laboratory experiment," European Journal of Political Economy, Elsevier, vol. 72(C).
    7. Tambunlertchai, Kanittha & Pongkijvorasin, Sittidaj, 2021. "Regulatory stringency and behavior in a common pool resource game: Lab and field experiments," Journal of Asian Economics, Elsevier, vol. 74(C).
    8. Sun, Xingping & Li, Mingyuan & Kang, Hongwei & Shen, Yong & Chen, Qingyi, 2023. "Combined effect of pure punishment and reward in the public goods game," Applied Mathematics and Computation, Elsevier, vol. 445(C).
    9. Song, Sha & Pan, Qiuhui & Zhu, Wenqiang & He, Mingfeng, 2023. "Evolution of cooperation in games with dual attribute strategy," Chaos, Solitons & Fractals, Elsevier, vol. 175(P1).
    10. Zhao, Jinhua & Wang, Xianjia & Niu, Lei & Gu, Cuiling, 2021. "Environmental feedback and cooperation in climate change dilemma," Applied Mathematics and Computation, Elsevier, vol. 397(C).
    11. Ma, Yin-Jie & Jiang, Zhi-Qiang & Podobnik, Boris, 2022. "Predictability of players’ actions as a mechanism to boost cooperation," Chaos, Solitons & Fractals, Elsevier, vol. 164(C).
    12. Wang, Jianwei & Yu, Fengyuan & He, Jialu & Chen, Wei & Xu, Wenshu & Dai, Wenhui & Ming, Yuexin, 2023. "Promotion, Disintegration and Remediation of group cooperation under heterogeneous distribution system based on peer rating," Chaos, Solitons & Fractals, Elsevier, vol. 168(C).
    13. Wang, Jianwei & Xu, Wenshu & Chen, Wei & Yu, Fengyuan & He, Jialu, 2021. "Inter-group selection of strategy promotes cooperation in public goods game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 583(C).
    14. Klaus Abbink & Lu Dong & Lingbo Huang, 2022. "Talking Behind Your Back: Communication and Team Cooperation," Management Science, INFORMS, vol. 68(7), pages 5187-5200, July.

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