Can short-term incentives induce long-lasting cooperation? Results from a public-goods experiment

• We study whether the initial provision of strong incentives to cooperate backfires in the long run.
• We study 2 × 10 rounds of a public good game with punishment in a fixed-partners design.
• Subjects with a higher MPCR in rounds 1–10 contributed more to the public good in rounds 11 and 12.
• Initially low punishment costs did not produce significantly higher contributions in later rounds.
• Contributions rapidly decline after the removal of strong incentives.

This paper investigates whether providing strong cooperation incentives only at the outset of a group interaction spills over to later periods to ensure cooperation in the long run. We study a repeated linear public-good game with punishment opportunities and a parameter change after the first ten (of twenty) rounds. Our data shows that cooperation among subjects who had experienced a higher marginal return on public-good contributions or low punishment costs in rounds 1–10 rapidly deteriorated in rounds 11–20 once these incentives were removed, eventually trending below the level of cooperation in the control group. This suggests the possibility of temporary incentives backfiring in the long run. This paper ties in with the literature highlighting the potentially adverse effects of the use of incentives.