Short- & long-term effects of monetary and non-monetary incentives to cooperate in public good games: An experiment.

Abstract

Using a common experimental framework, this paper addresses both the question of the short-term and the long-lasting effects of temporary monetary and non-monetary incentive mechanisms on increasing individual contributions to the public good. The results show that both punishments and rewards significantly increase contributions compared to the baseline, but that monetary sanctions lead to the highest contributions, whereas non-monetary sanctions lead to the lowest contributions. The four types of incentives display long-lasting effects, i.e., contributions do not go back to baseline levels directly after the withdrawal of the incentives. However, rewards appear to have much stronger persistent effects than sanctions, revealing some sort of delayed reciprocity.