Collaborative Paper by Zhu Chengkang, Niu Xiaofei and Li Jianbiao Published in International Top Economics and Management Journal Management Science to Discuss the Cooperative Effect of Reward Systems
Recently, the collaborative paper Costly Rewards Sustain Cooperation with Imperfect Monitoring by Associate Researcher Zhu Chengkang from the School of Economics and the Institute for the Study of Brain-Like Economics at Shandong University was published online in Management Science, an international top management journal. The paper was co-authored by Pan Jingjing from University of Jinan, Li Jianbiao, Niu Xiaofei and Zhu Chengkang from Shandong University, with Zhu Chengkang as the sole corresponding author.
This research focuses on the core problem in the cooperation dilemma — how to maintain effective cooperation in an opaque information environment, and systematically compares the effects of centralized reward and decentralized reward mechanisms under different information conditions through experiments for the first time. The research group designed a public goods game experiment including three systems (no reward, decentralized reward, centralized reward) and three information conditions (complete information, low noise, high noise), and deeply analyzed the impact mechanism of reward systems on cooperation level and economic efficiency by exogenously manipulating participants' observation accuracy of others' contribution information.
The experiment finds that when there is noise in information, the centralized reward system can achieve the highest level of cooperation, while decentralized reward shows the optimal economic efficiency. It is worth noting that although decentralized reward is more economical and efficient, the vast majority of participants still show a stable preference for the centralized reward system. The research further reveals the unique advantages of reward systems over punishment mechanisms in an imperfect information environment: even with information noise, rewards can effectively maintain cooperation by strengthening the correlation between contribution and reward.
This research provides important enlightenment for organizational management and public policy: when pursuing maximum cooperation output, a centralized reward system should be adopted; when taking cost-effectiveness into account, a decentralized reward system is more advantageous. This finding has important guiding value for enterprises to design incentive mechanisms in team incentives and governments in public governance.
Zhu Chengkang is an associate researcher at the School of Economics and the Institute for the Study of Brain-Like Economics at Shandong University. His research fields include behavioral economics and experimental economics, neuroeconomic (management) science, and neurofinance. His research achievements have been published in international top economic and management journals such as Management Science, Journal of Economic Behavior & Organization, and NeuroImage.
