Network reciprocity has been widely advertised in theoretical studies as one of the basic cooperation-promoting mechanisms, but experimental evidence favoring this type of reciprocity was published only recently. When organized in an unchanging network of social contacts, human subjects cooperate provided the following strict condition is satisfied: The benefit of cooperation must outweigh the total cost of cooperating with all neighbors. In an attempt to relax this condition, we perform social dilemma experiments wherein network reciprocity is aided with another theoretically hypothesized cooperation-promoting mechanism—costly punishment. The results reveal how networks promote and stabilize cooperation. This stabilizing effect is stronger in a smaller-size neighborhood, as expected from theory and experiments. Contrary to expectations, punishment diminishes the benefits of network reciprocity by lowering assortment, payoff per round, and award for cooperative behavior. This diminishing effect is stronger in a larger-size neighborhood. An immediate implication is that the psychological effects of enduring punishment override the rational response anticipated in quantitative models of cooperation in networks.We thank J. H. Lee for useful discussions. M.J. and Z.W. were, respectively, supported by the Research Grant Program of Inamori Foundation and the Chinese Young 1000 Talents Plan. B.P. received support from the Slovenian Research Agency (ARRS) and the Croatian Science Foundation through Projects J5-8236 and 5349, respectively. S.H. thanks the Israel-Italian collaborative project Network Cyber Security (NECST), Israel Science Foundation, Office of Naval Research (ONR), Japan Science Foundation, and the US-Israel Binational Science Foundation and the US National Science Foundation (BSF-NSF) for financial support. The Boston University Center for Polymer Studies is supported by NSF Grants PHY-1505000, CMMI-1125290, and CHE-1213217, by Defense Threat Reduction Agency (DTRA) Grant HDTRA1-14-1-0017, and by Department of Energy (DOE) Contract DE-AC07-05Id14517. (Inamori Foundation; Chinese Young 1000 Talents Plan; J5-8236 - Slovenian Research Agency (ARRS); 5349 - Croatian Science Foundation; Israel-Italian collaborative project Network Cyber Security (NECST); Israel Science Foundation; Office of Naval Research (ONR); Japan Science Foundation; US-Israel Binational Science Foundation; US National Science Foundation (BSF-NSF); PHY-1505000 - NSF; CMMI-1125290 - NSF; CHE-1213217 - NSF; HDTRA1-14-1-0017 - Defense Threat Reduction Agency (DTRA); DE-AC07-05Id14517 - Department of Energy (DOE))Published versio
