First carrot, then stick: how the adaptive hybridization of incentives promotes cooperation.

Social institutions often use rewards and penalties to promote cooperation. Providing incentives tends to be costly, so it is important to find effective and efficient policies for the combined use of rewards and penalties. Most studies of cooperation, however, have addressed rewarding and punishing in isolation and have focused on peer-to-peer sanctioning as opposed to institutional sanctioning. Here, we demonstrate that an institutional sanctioning policy we call 'first carrot, then stick' is unexpectedly successful in promoting cooperation. The policy switches the incentive from rewarding to punishing when the frequency of cooperators exceeds a threshold. We find that this policy establishes and recovers full cooperation at lower cost and under a wider range of conditions than either rewards or penalties alone, in both well-mixed and spatial populations. In particular, the spatial dynamics of cooperation make it evident how punishment acts as a 'booster stage' that capitalizes on and amplifies the pro-social effects of rewarding. Together, our results show that the adaptive hybridization of incentives offers the 'best of both worlds' by combining the effectiveness of rewarding in establishing cooperation with the effectiveness of punishing in recovering it, thereby providing a surprisingly inexpensive and widely applicable method of promoting cooperation.