Conflict, cooperation, and institutional choice

Social situations may vary in the severity of conflict between self-interest and collective welfare, and thereby pose collective action problems that might require different institutional solutions. The present study examines the effect of conflict of interests on beliefs, norms, cooperation, and choice of sanctioning institutions in social dilemmas across two experiments (total N = 1304). In each experiment, participants interacted in a public goods game (PGG), and a modified PGG with institutional choice using a 2 (conflict of interests: low vs. high) × 3 (institutional choice: peer punishment/no sanction vs. centralized punishment/no sanction vs. gossip plus ostracism/no sanction) between-participants design. More severe conflict of interests reduces individuals' own cooperation, first-order beliefs about others' cooperation, second-order normative expectations and personal norms of cooperation. This pattern is pronounced over time in repeated interactions. We did not find that conflict of interests influenced the choice to establish a sanctioning institution. Taken together, the challenges arising from stronger conflicting interests can cause the collapse of cooperation, hinder the emergence of trust and norms of cooperation, but do not provide the impetus to support a sanctioning institution to promote cooperation. Implications for solving public goods dilemmas that contain a severe conflict of interests are discussed.