Emotions, sanctions and cooperation
Southern Economic Journal
80(4): 1002-27
Joffily M
Masclet D
Noussair C
Villeval MC

We use skin conductance responses and self-reported hedonic valence to study the emotional basis of cooperation and punishment in a social dilemma. We argue that the availability of sanctions sets in motion a “virtuous emotional circle” that accompanies cooperation. Emotional reaction to free-riding leads cooperators to apply sanctions. In response, and in addition to the monetary consequences of receiving sanctions, the negative emotions experienced by the free-riders when punished lead them to increase their subsequent level of cooperation. The outcome is an increased level of cooperation that becomes a new norm. Therefore, emotions sustain both the use of altruistic punishment and cooperation.