A stream of research examining the effect of punishment on conformity indicates that punishment can backfire and lead … a penalty and excuse their selfish behavior. We address the question of punishment legitimacy in our experiment by … shedding light upon the importance of social norms and their interplay with punishment mechanisms. We show that the separate …

employee after she has inspected the employee. We find that rewards or sanctions can both discourage shirking, and have similar … and the efficiency gains accrue to employers. In games allowing rewards employers actively reward employees for working … and the efficiency gains are shared more equitably. A treatment where employers can combine sanctions and rewards leads to …

monitors'). We review the literature on the relative merits of punishment and rewards when the distribution of incentive power …Recent work in experimental economics on the effectiveness of rewards and punishments for promoting cooperation mainly … evidence showing how concentrating reward/punishment power in one group member affects cooperation. …

/or rewards following an inspection, we find that both instruments are equally effective in reducing shirking and increasing joint … earnings. When employers have discretion to reward and/or sanction independently of whether they inspect we find that rewards … are more effective than sanctions. In treatments where employers can combine sanctions and rewards employers rely mainly …

treatment where individuals audited and found compliant receive symbolic rewards. It is not the mere assigning of rewards, but … the material incentives inherent in the rewards that improve compliance. We conclude that existing tax mechanisms have …