From Good Institutions to Generous Citizens: Top-Down Incentives to Cooperate Promote Subsequent Prosociality But Not Norm Enforcement

Abstract

What makes people willing to pay costs to help others, and to punish others’ selfishness? Why does the extent of such behaviors vary markedly across cultures? To shed light on these questions, we explore the role of formal institutions in shaping individuals’ prosociality and punishment. In Study 1 (N=707), we found that the quality of institutions enforcing cooperativeness (police and courts) that American participants reported being exposed to in daily life was positively associated with Dictator Game (DG) giving, but had no significant relationship with punishment in a Third-Party Punishment Game (TPPG). In Study 1R (N=1,705), we replicated the positive relationship between reported institutional quality and DG giving. In Study 2 (N=516), we experimentally manipulated institutional quality in a repeated Public Goods Game with a centralized punishment institution. Consistent with Study 1’s correlational results, we found that centralized punishment led to significantly more prosociality in a subsequent DG compared to a no-punishment control, but had no significant direct effect on subsequent TPPG punishment (only an indirect effect via increased DG giving). Thus we present convergent evidence that the quality of institutions one is exposed to “spills over” to subsequent prosociality but not punishment. These findings support a theory of social heuristics, suggest boundary conditions on spillover effects of cooperation, and demonstrate the power of effective institutions for instilling habits of virtue and creating cultures of cooperation.

Keywords: cooperation; prosociality; dictator game; third-party punishment; learning; habits

JEL Classification: C70, C79, C90, C91, C92, D64, D70, D71, H41