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In modern society, cooperation is often secured through legal incentives—that is, monetary punishment introduced by an external third party. However, given that social norms governing responsable behavior often exist before the development of formalized institutional punishments, we seek to examine the impact of both types of incentives on a prosocial behavior. The law and economics literature generally maintains that, because legal sanctions tend to be mild, the presence of social norms and the corresponding peer pressure they generate is crucial insofar as they provide additional incentives to comply. However, whether peer nonmonetary punishment and external monetary punishment are more effective together than alone, especially in strategic situations such as public goods games, is to our knowledge unknown. Importantly, what remains unstudied in this sphere is the relative effectiveness of peer nonmonetary and external monetary punishment and whether the simultaneous availability of both generates a higher level of overall welfare than either type on its own. Ours is the first such study. In the next weeks we will be runing the first sessions of this experiment in the context of a Voluntary Contributions Mechanism (VCM). Importantly, this type of game has been extensively used to investigate the conflict between self- and group-interest, and is analogous to many real-world scenarios. As such, this study will conceivably be of interest to researchers and decision-makers in a wide range of domains.
