Costly punishment does not always increase cooperation.

Abstract

In a pairwise interaction, an individual who uses costly punishment must pay a cost in order that the opponent incurs a cost. It has been argued that individuals will behave more cooperatively if they know that their opponent has the option of using costly punishment. We examined this hypothesis by conducting two repeated two-player Prisoner's Dilemma experiments, that differed in their payoffs associated to cooperation, with university students from Beijing as participants. In these experiments, the level of cooperation either stayed the same or actually decreased when compared with the control experiments in which costly punishment was not an option. We argue that this result is likely due to differences in cultural attitudes to cooperation and punishment based on similar experiments with university students from Boston that found cooperation did increase with costly punishment.