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Prior research finds that both rewards and punishment promote cooperation in social dilemmas. We discuss an interdependence theoretical perspective on understanding the proximate psychological mechanisms that underlie how incentives work to promote cooperation. Specifically, we discuss how understanding the specific incentive structure of interdependent social interactions may lead to greater insight into both (a) the use and (b) the effectiveness of incentives in promoting cooperation. We also discuss important implications from understanding various social motives and the perceived motives of others that affect how incentives influence cooperation. By applying an interdependence perspective, we arrive at several new promising directions for future research on incentives and cooperation.

Individuals in relationships, groups, organizations, and societies often face social dilemmas—situations that involve a motivational conflict between choosing to do what is best for oneself or what is best for the collective. Certainly, relationships and groups can benefit when individuals sacrifice some of their immediate direct self-interest in order to behave in a way that is beneficial for the collective. Yet, people do not always choose to cooperate. The fact that people do even cooperate across a broad range of circumstances is quite puzzling to many biological and social scientists. Rational choice theory predicts that people will not cooperate in social dilemmas, unless their own interests are aligned with others (Hargreaves, Heap, & Varufakis, 2004). Moreover, evolutionary theory suggests that the evolution of cooperation amongst unrelated strangers (at …