Executive Summary
The method of payment for penalties such as traffic tickets or library fines has become increasingly digitalized, with possible implications on the future effectiveness of deterring opportunistic behavior. This article is the first to compare the efficacy of punishment between cash and electronic cash-exchangeable penalties in a laboratory setting. Our results indicate that although both forms of punishment increase cooperation, cash penalties are significantly more effective. Interestingly, this difference gradually disappears over time.
The method of payment for penalties such as traffic tickets or library fines has become increasingly digitalized, with possible implications on the future effectiveness of deterring opportunistic behavior. This article is the first to compare the efficacy of punishment between cash and electronic cash-exchangeable penalties in a laboratory setting. Our results indicate that although both forms of punishment increase cooperation, cash penalties are significantly more effective. Interestingly, this difference gradually disappears over time.
