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What makes a sanction “stick”? The effects of financial and social sanctions on norm compliance

Finance, Psychology, biases, incentives, norms

Abstract

The present research shows that, like financial sanctions, social punishment (the mere expression of disapproval with another person’s conduct) induces compliance with norms for cooperation in a social dilemma. More importantly, after removing the sanctioning opportunity levels of cooperation decrease more under former financial than under former social sanctioning systems. Hence social sanctions are more effective than financial sanctions at inducing “sticky” norms that guide behavior even in the absence of punishment cues. Public policy implications are discussed.

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