On the interaction of the stick and the carrot in social dilemmas

Recent developments in the study of social dilemmas have revealed various cooperative solutions of the “tragedy of the commons” problem. If the public goods game, i.e. the experimental paradigm of the tragedy of the commons, offers the opportunity to punish (the 'stick'), contributions to the public pool usually increase. Direct rewarding (the 'carrot') has been shown to be less effective. If, however, the social dilemma is embedded in a richer context, in which either a good reputation for cooperativeness or mutual rewarding independently pays, cooperation in the PG game may be sustained at high levels. Yet, the proposed mechanisms vary in their efficiency and whether or not in the framework, which combines the stick with the carrot; punishment is strongly reduced compared to just having the punishment option. We review and analyze the relevant literature and discuss the discrepancies.