Cooperation and retaliation in collective good games:Does counter-punishment really destroy cooperation?

Previous research has pointed to the potential of counter-punishment opportunities to undermine the positive effects of ‘altruistic punishment’ on cooperation in collective good games. These studies may have excluded important aspects of punishment in real life settings, notably the ambiguity whether punishment is a retaliation for previous punishment or a sanction imposed for free-riding. To derive expectations, we draw on an earlier social exchange model of the ambiguity of positive sanctions as a means of social control in a repeated collective action game. We argue that counter-punishment may become considerably less attractive for free riders who experienced a sanction, when the possibility to retaliate is embedded in a longer term ongoing exchange relationship. In such a setting, counterpunishment may evoke in turn retaliation or fail to prevent future sanctions from norm enforcers. To test our expectations, we extend the collective good experiments of Fehr and Gächter (2000) with a counter-punishment condition, to assess the extent to which counter-punishment opportunities impair the effectiveness of punishment as a solution to the cooperation problem in collective good games. We compared a treatment in which counter-punishment was not possible to a treatment in which it was,keeping all other conditions equal. Results showed that there was both free-riding and costly punishment in the treatment without counter-punishment. When counter-punishment was added, we found thatthe opportunity to counter-punish did not lead to significant levels of actual counter-punishment in the first place, although there was still free-riding and costly punishment of free-riders. This supports the view of punishment as an effective enforcement instrument of cooperation in a collective-good situation,even when counter-punishment is possible. This has led us to devise a follow-up study in which we test possible explanations for the absence of counter-punishment. Data for this follow-up are currently being collected