Rules are thought to persist to the extent that the direct benefits of having them (e.g. reducedtransactions costs) exceed the costs of enforcement and of occasional misapplications. We arguethat a second crucial role of rules is as screening mechanisms for identifying cooperative types.Thus we underestimate the social value of rules when we consider only their instrumental value insolving a particular problem. We demonstrate experimentally that costly rule-following can be usedto screen for conditional cooperators. Subjects participate in a rule-following task in which theymay incur costs to follow an arbitrary written rule in an individual choice setting. Without theirknowledge, we sort them into groups according to their willingness to follow the rule. Thesegroups then play repeated public goods or trust games. Rule-following groups sustain high publicgoods contributions over time, but in rule-breaking groups cooperation decays. Rule-followersalso reciprocate more in trust games. However, when individuals are not sorted by type, we observeno differences in the behavior of rule-followers and rule-breakers.
