Combination of institutional incentives for cooperative governance of risky commons

TL;DR

This paper investigates how combining positive and negative incentives, especially local reward schemes, can effectively promote cooperation in managing risky commons, with findings applicable across different institutional setups.

Contribution

It demonstrates that local reward-based incentives are most effective for fostering cooperation in risky commons, regardless of institutional flexibility.

Findings

Local reward schemes drive high cooperation levels.

Pure reward incentives outperform punishment in effectiveness.

Local arrangements are more effective than global schemes.

Abstract

Finding appropriate incentives to enforce collaborative efforts for governing the commons in risky situations is a long-lasting challenge. Previous works have demonstrated that both punishing free-riders and rewarding cooperators could be potential tools to reach this goal. Despite weak theoretical foundations, policy-makers frequently impose a punishment-reward combination. Here, we consider the emergence of positive and negative incentives and analyze their simultaneous impact on sustaining risky commons. Importantly, we consider institutions with fixed and flexible incentives. We find that a local sanctioning scheme with pure reward is the optimal incentive strategy. It can drive the entire population towards a highly cooperative state in a broad range of parameters, independently of the type of institutions. We show that our finding is also valid for flexible incentives in the global sanctioning scheme, although the local arrangement works more effectively.