Changing Social Norms – Reward vs. Punishment

Topic: How effective are reward incentives, versus punishment, when trying to change social norms
Researchers: Florian Herold, an assistant professor of managerial economics and decision sciences at the Kellogg School of Management, Northwestern University, US
Year: 2010
Formal Reference: Herold, Florian, Carrot or Stick: The Evolution of Reciprocal Preferences in a Haystack Model (February 5, 2010). Munich Discussion Paper No. 2003-5.
Main Conclusion: If you want to change a norm, it’s cheaper to start doing so by rewarding people.  Only later, once the change is established, a punishment, to those who haven’t made the change, becomes more effective.

Description of Experiment
a. Group of people who know each other divided into two – “Proposers” and “Seconders”.
b. Three game settings:
Setting A. – rewards offered for cooperation.
Setting B. – only punishment for non-cooperative behavior.
Setting C. – both rewards and punishment options
c. The game’s different settings show, that in the beginning, the reward incentive is required to encourage cooperation. Once a cooperation environment is established, punishing non-cooperative behavior becomes much cheaper to encourage cooperation.

Explanation through Illustration
While both the carrot and the stick play strong roles in influencing changes in a group’s actions, they operate in different ways.
To illustrate his findings, Herold suggests two ways to fulfill the recommendation of many doctors that people sneeze into their elbows rather than into their hands.  Here the carrot and the stick—rewarding and punishing behaviors—can work in concert. “Do you punish everybody who does the wrong thing by sneezing into the hand or reward those who use their elbows?” he asks.  “Punishment is not viable in the beginning because you’d be punishing almost everybody.  Rewarding works at that time, as few people will be getting rewarded in the beginning.  But at some point punishment takes over, as by then few people will be doing the wrong thing, and hence few will be punished.” That shows “that it’s much easier to change an established behavior by offering rewards, rather than threatening with punishments,” he adds.  “But once you have established a norm, sustaining it by the threat of punishment is cheap.  Only a few people will violate the norm, so you will rarely have to follow through with your threat.”

The Evolution of Reciprocal Preferences in a Haystack Model¤
Carrot or Stick The Evolution of Reciprocal Preferences in a Haystack Model