Empirical and Theoretical Insights into the Role of Rewards : Welfare Enhancement and Cooperation Facilitation under Imperfect Information Conditions

Despite prevailing research asserting the efficiency and stability of punishment over rewards in an environment of perfect information, the prevalence of reward structures in everyday life remains apparent. This commonality might be explained by the enhanced cooperative behavior and welfare these structures promote in social dilemmas, particularly when accurate assessment of contribution is challenging. However, this assertion remains largely uncorroborated by empirical evidence. This study investigates whether reward-based structures provide a satisfactory resolution for social dilemmas in the context of imperfect information. The findings suggest that reward structures facilitate higher cooperation levels and afford participants greater welfare in imperfect information scenarios. Notably, the majority of participants demonstrated a preference for reward structures, even amidst substantial information noise. This research illuminates the superior applicability of reward structures in real-world contexts