The double edge of counter-sanctions: How peer sanctioning can be robust to counter-punishment but vulnerable to counter-reward

Peer sanctioning institutions are powerful solutions to the freerider problem in collective action. However, counter-punishment may deter sanctioning, undermining the institution. Peer-reward can be similarly vulnerable, because peers may exchange rewards for rewards (“counter-reward”) rather than enforce contributions to the collective good. Based on social exchange arguments, we hypothesize that peer reward is vulnerable in a repeated game where players are fully informed about who rewarded them in the past. Social preference arguments suggest that peer-punishment is robust under the same conditions. This contrast was tested in an experiment in which counter-sanctioning was precluded due to anonymity of enforcers in one treatment and allowed in another treatment by non-anonymity of enforcers. This was done both for a reward and for a punishment institution. In line with the exchange argument, non-anonymity boosted reward-reward exchanges. Punishment was only somewhat reduced when enforcers were not anonymous. In contrast with previous experiments, we found no effects of counter-sanctioning on contributions. Thus, non-anonymity did not undermine the effectiveness of the peer sanctioning institutions in our experiments, neither for reward nor for punishment. Our results suggest that previous claims about the vulnerability of peer-punishment to counter-punishment may not generalize to non-anonymous repeated interactions.