Framing in Resource Dilemmas: Loss Aversion and the Moderating Effects of Sanctions

Two resource dilemmas, the commons dilemma, in which individuals take from a common resource, and the public goods problem, in which individuals give to a common good, were experimentally compared. Although they provide equivalent outcomes, the two dilemmas involve different frames of reference and are not psychologically equivalent. We also examined sanction systems, which involve contributions by individuals in the dilemma to provide rewards and penalties for cooperation. The results of Experiment 1 supported the hypothesis that public goods problems ("give dilemmas") activate greater loss aversion and less cooperation than commons dilemmas ("take dilemmas"), and that this effect is moderated by sanction systems. No difference between dilemmas was obtained when either the reward or penalty sanction was present, indicating that sanctions cause a shift in frame of reference to the aspiration of obtaining the reward or avoiding the penalty. The penalty sanction and especially the reward sanction produced greater cooperation. Also, as expected, loss aversion heightened exploitation: when the others were cooperative, a give dilemma generated less cooperation than a take dilemma. In Experiment 2, we extended the concept of frame and loss aversion to the structure of sanction systems, finding that subjects were more likely to contribute to a "take sanction" than to a "give sanction." We discuss potential sources of reference points and loss aversion in resource dilemmas and the likely impact on cooperation.