Threat of Punishment Works, Study Suggests

Jeanna Bryner

Date: 04 December 2008 Time: 09:03 AM ET

The threat of punishment actually does stamp out freeloaders, tending to transform them into rule-following members of a society, a new study suggests.

The research results show how established norms and rules in a society could keep freeloaders in check and increase pro-social behavior, such as helping others or sharing with them rather than looking out for number one.

In the past, studies have found that while punishing freeloaders can increase their cooperation with others, the punishment itself was too costly and in the end, punishment wouldn't be worth it. These past studies were based on short-term effects, however.

The new study shows that over the long term, punishment gets ingrained in people's psyches in a way that causes them to fear getting into trouble. This fear can keep otherwise freeloaders, who would normally act as sponges to soak up the generosity of others without having to contribute any time or money, on the straight-and-narrow.

"I believe the experimental work is extremely important and timely, as many researchers had voiced concern whether punishment is not too costly a tool to promote cooperation," said Karl Sigmund of the University of Vienna, who was not involved in the current study. Sigmund studies the evolution of cooperation among other topics.

The research will be published in the Dec. 5 issue of the journal Science.

Queue rules

Lead researcher Simon Gächter, a professor of the psychology of economic decision making at the University of Nottingham in England, gives an example to explain the phenomenon. He recalls waiting in line for a taxi outside of New York’s Kennedy airport when someone cut in line. Another guy in line went up and told the line-cutter he needed to get back in the queue.

"This is punishment, because the guy was embarrassed and turned red," Gächter told LiveScience. "It's also costly for the guy who did it because you never know [what could happen]."

In general, most people do wait their turn in line, and such an enforcer isn't needed, he added.

Other examples of situations that require cooperation to achieve socially beneficial outcomes include: voting, paying taxes, fighting corruption, teamwork, work morale, neighborhood watch, recycling, tackling climate change and so on, the researchers say.

Money game

Here's how Gächter revealed the beneficial nature of punishment over the long run: He and his colleagues had 69 groups of three individuals play money games.

Each participant received 20 tokens and had to decide how many tokens to keep and how many to contribute to a group project. Keeping a token meant a person gained the token's total worth. For each token contributed, every participant would earn 0.5 money units, regardless of his or her own contribution.

So the cost of contributing to the group would be one money unit, with a return on that token of only 0.5 money units. That makes it in the participant's material self-interest to keep the tokens. Yet if all tokens are kept by members, each group member will earn 20 money units; if all tokens are put into the community pot, each member will earn 30 money units.

The participants were split into groups, with each group playing either 10 or 50 rounds of the game and either having the ability to punish other group members or having no punishment abilities. For the punishment scenario, a player could deduct tokens from others after finding out the players' contributions.

The catch: Each point deducted reduces that punished player's earnings by three money units and costs the punisher one money unit.

Punishment works

The results showed there were far fewer freeloaders, or players who kept all the tokens for themselves, in the games that allowed punishment compared with the no-punishment games.

Even though punishment increased cooperation, in the 10-round games, most groups fared better with more total tokens when there was no punishment allowed.

"The reason why this works is that there are actually people out there who are willing to sacrifice to punish the freeloaders," Gächter said. "The freeloaders now stop freeloading, they start cooperating more, but it also takes a lot of punishment to get them there."

But in the longer games, punishment did pay off in the end.

Within the punishment scenarios, the players raked in nearly 10 tokens more when the game was played for 50 rounds as compared with 10 rounds. In addition, players earned a lot more in the punishment game lasting 50 rounds compared with the no-punishment game with that number of rounds.

The earnings were so high in the long-term punishment game because people not only cooperated more, contributing more tokens to the shared pot, there was also less punishment needed, so fewer tokens got deducted from players.

"In the long run, [punishment] is not detrimental, because the freeloaders now know there are punishers out there," Gächter said. "So punishment just works as a threat. Everybody behaves nicely because they fear punishment. Therefore, punishment is very rarely needed."

The research was funded by the University of Nottingham and the British Academy.