Profiting from punishment

NY Times:

Sociologists have long known that communes and other cooperative groups usually collapse into bickering and disband if they do not have clear methods of punishing members who become selfish or exploitative.

Now an experiment by a team of German economists has found one reason punishment is so important: Groups that allow it can be more profitable than those that do not.

Given a choice, most people playing an investment game created by the researchers initially decided to join a group that did not penalize its members. But almost all of them quickly switched to a punitive community when they saw that the change could profit them personally.

The study, appearing today in the journal Science, suggests that groups with few rules attract many exploitative people who quickly undermine cooperation. By contrast, communities that allow punishment, and in which power is distributed equally, are more likely to draw people who, even at their own cost, are willing to stand up to miscreants.

...

"The bottom line of the paper is that when you have people with shared standards, and some who have the moral courage to sanction others, informally, then this kind of society manages very successfully," said the study's senior author, Bettina Rockenbach, who was joined in the research by Bernd Irlenbusch, now at the London School of Economics, and Ozgur Gurek.

...

The chances are remote that the NY Times Editorial Board will comprehend the meaning of this study. They still cannot not get their heads around the concept that more people in prison leads to a falling crime rate. Then there is also the concept of people on welfare as free riders. You know that the Times opposed welfare reform that gave these people an incentive to go to work.