Social norms, third-party observation and third-party reward

This paper examines the influence of third-party observation and third-party reward on behavior in an experimental prisoner's dilemma (PD) game. Whereas the existing literature on third-party intervention as a means to sustain social norms has dealt almost exclusively with third-party punishment, we show that both third-party observation and third-party reward have positive effects on cooperation rates, compared to a treatment where no third party is involved. Third-party reward is more effective in increasing cooperation than third-party observation. However, rewards are given too late to prevent a steady downward trend of cooperation rates.