Collective action as a social exchange

Social interactions are frequently associated with social approval. Anticip ation of social sanctions may have important economic consequences, in part icular in the realm of collective action and voluntary cooperation. This pa per investigates the impact and the limitations of social rewards on people 's behavior in the provision of a public good. We examine whether the oppor tunity to receive social approval in exchange for participation in collecti ve actions is capable of overcome free-riding. We find that approval incent ives alone are not sufficiently strong to cause a reduction in free-riding. However, in combination with some minimal social familiarity approval ince ntives generate a significant rise in cooperation. Our results also suggest that approval incentives give rise to multiple equilibria. (C) 1999 Elsevi er Science B.V. All rights reserved. JEL classification: H41; D64; D74; C91 .