Abstract

Violating norms is usually associated with the risk of negative consequences when norm non-compliance is disclosed. In our paper, we study the influence of probabilistic punishment and reward on norm compliance. We use an adapted version of the die roll task introduced by Fischbacher and Föllmi-Heusi (2013). In our punishment scenarios, behavior is audited with a certain probability and non-compliant behavior is penalized with a fine. Compared to the baseline scenario without sanctions, we observe that punishment leads to a crowding out of intrinsic motivation that results in an increase of non-compliant behavior. Therefore, deterrence has a diametrically opposed effect on norm compliance than desired. However, increasing the audit probability increases the extrinsic motivation and results in lower non-compliant behavior. The same findings are observed in our rewards scenarios in which compliant behavior is awarded with a probabilistic reward. However, our results suggest that rewarding is less efficient in terms of extrinsic motivation than punishing.