Do people prefer leaders who enforce norms? Reputational effects of reward and punishment decisions in noisy social dilemmas

The present paper investigates how rewards as well as punishments – implemented to enforce the social norm of cooperation – impact the reputations of the leaders administering them. Moreover, we investigate whether and how the effects of norm enforcement decisions on leaders' reputations change when – due to behavioral noise – they are unable to perfectly monitor group members' decisions. To address these questions, we present a new psychological perspective that uses insights from the person perception literature to define and measure different sub-dimensions of leaders' reputations (i.e., morality, competence and sociability). In three experimental studies, we show that under no noise both decisions to reward and decisions to punish can have a positive effect on leaders' reputations (as compared to leaders who do not punish or reward; Studies 1, 2, and 3), and that these findings extend to leader preferences (Study 2). Interestingly, all three studies also showed that these effects are moderated by noise. That is, under noise decisions to reward have a more positive influence on leaders' reputations than decisions to punish (Studies 1, 2, and 3). Moreover, we found these effects in two different contexts: a social dilemma game (Studies 1 and 2) and an organizational setting (Study 3). In the general discussion, the implications of these findings are outlined and suggestions for future research are given.