Sanctioning Systems,

Decision Frames,
and Cooperation
Ann E. Tenbrunsel
University of Notre Dame

David M. Messick
Northwestern University
Three studies are used to examine how surveillance and sanctioning systems affect
cooperative behavior in dilemma situations. The first two studies demonstrate that
a weak sanctioning system results in less cooperation than no sanctioning system;
furthermore, results from the second study suggest that sanctions affect the type
of decision people perceive they are making, prompting them to see it as a business rather
than an ethical decision.
The results from these studies are used to develop a theoretical model that postulates that
the relationship between sanctions and cooperation is due to both a signaling effect, in
which sanctions influence the type of decision that is perceived to be made, and a
processing effect, in which the decision processing, including whether or not the strength of
the sanction is considered, depends on the decision frame evoked. A third study provides
support for the processing-effect hypothesis.*
The use of surveillance and sanctioning systems to monitor and motivate employees is almost
commonplace. It is estimated that over 60 percent of companies use surveillance and monitoring
procedures, including taping phone calls, perusing
e-mail messages, and relying on spy cameras (Selnow
and Gilbert, 1997), Many managerial trends have contributed
to the increasing importance of such systems in organizations.
Concepts such as just-in-time inventory and total quality
control, which rely heavily on monitoring performance
relative to a benchmark standard, have been argued to create
a demand for systems of surveillance (Sewell and Wilkinson,
1992), Surveillance and sanctioning systems have also
been seen as critical in promoting ethics in organizations,
since it has been argued, the "failure to seriously monitor,
measure and reward (punish) the performance of individuals
on the ethical plane will leave codes of conduct operating in
a vacuum, of little use in actually promoting ethical behavior"
(Lindsay, Irvine, and Lindsay, 1996: 403),
Given the focus of many of our organizational theories, it
comes as no surprise that these systems play such a prominent
role in organizations. From theories about the cognitions
and behaviors of individuals to theories about the behavior
of firms, the monitoring and sanctioning of employee,
managerial, and organizational actions are portrayed as important
components of firm success. We see this emphasis
in discussions of the functions of management, which have
been described as consisting of the components "to plan,
organize, staff and control" (Barnard, 1938: xiv). The last
component, control, has been further specified to consist of
three stages: (1) specifying and communicating objectives;
(2) monitoring performance through measurement (feedback/
control); and (3) motivating employees to accomplish objectives
by linking outcomes to achieving those objectives (Otley
and Bern/, 1980),
At a micro level, the monitoring of performance is a central

piece of Skinner's (1953) theory of reinforcement, in which

behavior is measured and, based on the outcome, a particular
reinforcement is applied. Agency theory, a more macrolevel
perspective concerned with understanding and resolving
the conflict between owners and workers (Jensen and
Meckling, 1976; Fama, 1980), has as its focus the creation
of systems that ensure worker connpliance. Monitoring ennployee
behavior is at the heart of these systems, in which
surveillance of employee actions, accompanied by sanctions
such as money or promotions, is used to reduce potentially
destructive behavior {Pfeffer, 1994).
Despite the emphasis on surveillance and sanctioning systems
found in our organizational theories and the promise of
such systems for ensuring cooperation in organizations,
there appears to be a growing number of skeptics.'' Pfeffer
(1994) provided an insightful look at the counterproductive
effects of managerial control systems. Similarly, Walsh and
Seward (1990) have argued that inefficiencies in control systems
are linked to firm failure. Cialdini (1996) even characterized
surveillance systems as one of the three "tumors" that
contribute to unethical behavior in organizations. A variety of
specific problems have been associated with sanctioning
systems. Scholars have argued that these systems send a
signal of mistrust to employees, which in turn can lead to
resentment, a feeling of distrust toward management, and
oppositional relationships (Strickland, 1958; Kruglanski, 1970;
Kipnis, 1972; Pfeffer, 1994; Cialdini, 1996). Systems that are
seen as controlling behavior, rather than promoting autonomy,
have also been argued to produce feelings of increased
pressure and tension, decreased creativity, decreased
cognitive flexibility, decreased positive emotions,
and lower self-esteem (Deci and Ryan, 1987).
Perhaps the
most frequently discussed downside of sanctions, however,
is the effect on intrinsic versus extrinsic motivation. With
extrinsic motivation, the goal of an individual's behavior is
distinct from the behavior itself (Deci and Ryan, 1987), while
intrinsic motivation involves pursuit of an activity because
there is an inherent satisfaction that is derived from pursuing
the activity. The external pressure to perform generated by
surveillance and sanctioning systems is asserted to be a detriment
to intrinsic motivation because individuals conclude
that their behavior is caused by an extemal force and not by
their natural preference for the activity (Deci and Ryan, 1987;
Pfeffer, 1994; Cialdini, 1996). For example, Lepper and
Greene (1975), found that preschool children who were told
that their performance on a set of puzzles would be periodically
monitored by a television camera exhibited less interest
in the puzzles at a later point in time than children who were
not told their performance would be monitored. Similarly,
Pittman et al. (1980) discovered that in-person surveillance
resulted in a reduction of intrinsic motivation.
The reduction in intrinsic motivation can have disastrous consequences
for organizations. Surveillance and sanctioning

systems communicate to employees that responsibility for

performance rests with the system, not the individual (Pfeffer,
1994). As a result, individuals become "less interested in
the desirable conduct for its own sake" (Cialdini, 1996: 57).
The final outcome may be that the sanctioning system either
has no effect or actually increases the unwanted actions
whenever the system is not watching (Lingle, Brock, and
Cialdini, 1977; Cialdini, 1996). Thus, while control systems
can be useful in directing behavior, they can also produce
undesirable effects.
685/ASQ, December 1999

The purpose of this paper is to investigate the effects of

sanctions on cooperative behavior and to understand the
cognitive basis for this relationship. Given the espoused importance
of such systems in organizational theories, one
situation in which they would appear to be effective is in
prisoner and social dilemma situations. In these situations,
individuals are faced with a decision either to cooperate or
defect. They are described as dilemmas because there is a
conflict between individual and collective rationality (Kahan,
1974): that is, the dominant or more profitable individual
strategy is to defect, and yet the dominant collective strategy
is to cooperate. Thus, in the typical prisoner's dilemma
in which individuals can either confess to police or keep
quiet, the best strategy for Prisoner 1 is to confess (defect)
rather than remain quiet (cooperate), regardless of what Prisoner
2 does; however, if both prisoners confess, they are
worse off than had they both remained quiet.
A social dilemma involves the same conflict between the
rational individual and collective strategy as does a prisoner
dilemma, the only difference being that a social dilemma involves
more than two actors. One typical form of a social
dilemma is a resource dilemma in which a group shares
common access to a resource (i.e., water, land) from which
individual members can harvest (Hardin, 1968). In these dilemmas,
the rational individual strategy is for each individual
to consume as much of the resource as possible, but if everyone
follows this strategy, the resource becomes exhausted
and all actors end up worse off than if they had consumed
the resource in moderate proportions. A real-life
example of such a dilemma involves the current situation in
the northeast fisheries, where fishers have followed the individually
rational strategy to overharvest. The end result is an
extreme reduction (if not elimination) of many principal
ground fish stocks and the collapse of many fisheries (National
Marine Fisheries Service, 1992).
Dilemas are rife in organizations. At a department level, it
is best for each individual department to consume as much
of the resources (i.e., budget, employees, space) as possible,
but collectively, this strategy may reduce the viability
of the firm and hence of its individual departments. Similarly,
at an individual level, it makes sense for each employee to
shirk his or her responsibilities, but if all employees adopt

this strategy, the end result (i.e., lower bonus pool, small or
no salary increases) may leave them worse off than if each
had expended some effort. Ensuring cooperative behavior
can be difficult in organizational dilemmas, particularly because
defection can be hard to detect (i.e., it is difficult to
measure shirking), employee promotions and turnover result
in instability in the dilemma participants, and the large number
of participants makes communication nearly impossible.
Monitoring and sanctioning such behavior would appear to
be an effective solution to overcome these structural barriers
to cooperation. By installing a sanctioning system to ensure
that all employees and departments are cooperating, both
individual and organizational outcomes would be enhanced if
the savings of the system are greater than its costs.
For example,
with a sanctioning system designed to promote cooperation
by fining individuals who are caught defecting, the
686/ASQ, December 1999
Sanctioning Systems

fine mathematically reduces the attractiveness of defecting,

such that defection in the presence of such a system results
in a lower expected value than defection when no such system
is in place. From a utility maximization perspective, one
would predict that this lower expected value would reduce
defection. It has been asserted that the goal of sanctioning
systems is to increase cooperation, and hence decrease defection,
by changing the payoff structure (Messick and
Brewer, 1983) to make defection less rewarding, and research
has shown that sanctions do induce cooperation
(Yamagishi, 1986, 1988; McCusker and Carnevale, 1995),
Yamagishi (1986, 1988, 1992) proposed that in addition to
this direct effect, sanctions may also have an indirect effect
on behavior by altering expectations of others' behavior, thus
reassuring reluctant cooperators that they will not be exploited
by others. Therefore, sanctions, by directly influencing
the attractiveness of defecting and/or by indirectly influencing
behavior through expectations of others, should
decrease the likelihood of defection.
In addition to these direct and indirect influences on cooperation,
however, a sanctioning system may have unintended
consequences (Lingle, Brock, and Cialdini, 1977;
Pfeffer, 1994; Cialdini, 1996), Research on cooperation and
decision making in social situations indicates that to understand
these unintended consequences, it may be useful to
explore the effects that sanctioning systems have on the
way the decision situation is perceived and understood,
Messick (1999a) has applied some of March's (1995) ideas
to individual decision making in social situations and has emphasized
the importance of the perception of the situation.
In particular, he focused on the importance of judgments of
appropriateness in social situations that attempt to answer
the question, "What kind of situation is this?" For example,

if the situation is competitive, then the proper thing to do is

to figure out how to compete. If the situation is cooperative,
it is appropriate to coordinate actions with others. At the
heart of Messick's (1999a) theory are two assumptions. The
first is that the judgment of appropriateness influences not
only the perception of what type of behavior is proper but
also expectations of what others will do, what norms are
applicable, and what kinds of attributions about others are
justified. The appropriateness judgment thus determines a
cluster of perceptions, including what behavior is called for
in that specific situation, Messick's second assumption concerns
the powerful influence of relatively minor, tangential,
environmental cues, Larrick and Blount (1997), for instance,
found that differences in levels of cooperation in social dilemas
and ultimatum bargaining games were traceable to
the verbs used to describe the games to participants,
"Claiming" part of a shared resource produced more cooperation
than "rejecting" or "accepting" someone else's offer,
even though the payoff structures were identical, Messick
(1999a) also reviewed sequential and temporal features,
other linguistic variables, and justifications and reasons,
which make a difference in levels of cooperation without influencing
the payoff structure.
The introduction of a surveillance and sanctioning system
may serve as another cue, a cue that not only alters payoffs
687/ASQ, December 1999

but also alters the perception of the situation. We hypothesize

that a sanctioning system can transform a social dilemma
from a situation in which the choice of competing or
cooperating is infused with ethical and moral considerations,
at least for some people, to one in which the choice is
mainly about averting penalties or achieving rewards.
The
written comments offered by the participants of McCusker
and Carnevale's (1995) study provide informal support for
this hypothesis. If sanctioning systems convert the situation
from one having ethical and economic connotations to one
having mainly economic associations, we would expect cooperation
to decrease if the costs for not cooperating are
relatively small. Thus, these systems can have two contradictory
effects. They can create direct or indirect influences
on the propensity for cooperation and, at the same time,
transform a situation into one that is primarily economic, and
hence noncooperative, in meaning. This idea suggests that
sanctions can either increase or decrease cooperation, depending
on which of these impacts is foremost:
Hypothesis 1: When a sanctioning system is present, but likely to
be ineffective because of low detection probabilities and/or small
penalties, the system may actually decrease cooperation as compared
with a situation in which a sanctioning system is not present.
This is a counterintuitive hypothesis in that it proposes that
adding penalties for defection in a social dilemma, albeit
small, may actually decrease the rate of cooperation.

Yamagishi's (1986, 1988, 1992) discussions on the indirect

effect of sanctions, Messick's (1999a) framework on the
connotative effect of decision frames in dependent variable
"clusters," and discussions on the relationship between
sanctioning systems and trust (Strickland, 1958; Kruglanski,
1970; Kipnis, 1972; Cialdini, 1996) all suggest that sanctioning
systems should affect not only cooperative behavior but
also expectations of others' cooperative behavior.
This research
would predict a negative relationship between weak
sanctions and expectations, either because of the positive
association between behavior and expectations, such that
decreased expectations would be associated with decreased
cooperative behavior, or because of a direct negative effect
of sanctions on beliefs about others. Thus, decreased expectations
of others' cooperation should also be prevalent in
situations in which sanctions are weak.
The foundation for hypothesis 1 can be understood by considering
the impact that sanctions have on the decision
frame or the type of decision that decision makers perceive
they are making. Pillutla and Chen (1999) have explicitly
demonstrated that the frame of a dilemma can influence the
tendency to cooperate: a dilemma framed in an economic
context produced less cooperation than a dilemma framed in
a noneconomic context, even though both dilemmas had the
same payoffs. If frames do influence cooperation, then it is
important to identify factors that evoke a particular frame. A
sanctioning system may be one such factor. As discussed
earlier, dilemmas conjure up both economic and ethical considerations.
The presence of a sanctioning system should
direct attention to the fines associated with defection and
heighten the focus on the economic or business components
of the decision at the expense of the moral or ethical
688/ASQ, December 1999
Sanctioning Systems

components. More specifically, we propose that a sanctioning

system shifts the balance between these two components:
Hypothesis 2: The presence of a sanctioning system will lead to
judgments that the decision is more business in nature, whereas
the absence of such a system will lead to the perception that the
decision is relatively more ethical.
We tested our two hypotheses with two studies. In the first
study, we used a repeated two-party experiment to examine
the hypothesis that weak sanctions may fail to increase cooperation
and may actually decrease cooperation and expectations
of cooperation in dilemma situations. In the second
study, we used a one-trial multiparty design to provide insight
into the findings of study 1 by investigating the influence
of sanctions on perceptions of the decision frame and
to enhance the generalizibility of the findings by using a different
context than that used in the first study. We used the
results of these two studies to develop a more general
model of the influence of sanctioning systems on cooperation
and then conducted a third study to test the model.

STUDY 1
Study 1 used a two-party, prisoner's dilemma to explore the
influence of weak sanctioning systems on behavior and expectations
of others' behavior. This study was designed to
allow for a comparison of cooperation rates and expectations
of cooperation rates when there are weak sanctions versus
no sanctions. A multitrial design allowed a longitudinal assessment
of cooperation under these conditions.
Methods
Eighty-four students who were enrolled in an undergraduate
management class participated in the study as part of a
class discussion on dilemmas. Given the important role that
the behavior of others has been asserted to play in these
types of situations (Pruitt and Kimmel, 1977), the study was
designed as a 2 x 2 with sanctions as one independent factor
(yes or no) and others' decisions (cooperate or defect) as
the second orthogonal, independent factor.
Participants were asked to assume the role of Jones, a company
production manager who was responsible for producing
half of the components of a particular home fitness system.
Smith, the other production manager, was responsible for
the production of the other half of the components. Participants
were told that production of the components occurred
simultaneously, after which they were assembled into a
complete system and distributed to retailers. The dilemma
was set up so that the participants, in the role of Jones, had
to decide whether or not they should request quality inspections
of the system. The dilemma was described to the participants
as follows:
Requesting a quality inspection costs you money but less money
than if a problem is diagnosed by the retailer or the consumer after
the product has been shipped out. As a quality inspection occurs
after the system is assembled, the report contains information on
component processes produced by both you and Smith, regardless
of who requested the inspection. Thus, if you request an inspection
and Smith does not. Smith will reap the benefits of the knowledge
689/ASQ, December 1999
that the inspection provides and vice versa. If you both request an
inspection, you will both bear the cost of the inspection but the
probability that the product will be defective and need to be reworked
is relatively small. If neither of you requests an inspection,
neither of you will incur the cost of an inspection but the probability
that the product will be defective and needs to be reworked will be
high.

Participants were then told that their supervisors had put

together an estimate of the unit profitability, which included
both the cost of an inspection and the cost of reworking the
system if no inspection occurred and a defect was found
after the system had been shipped out. The unit profitability
provided to the participants is shown in table 1,
Table 1

Participants were then provided with a description of each of

the four possible scenarios, including resulting profitability
for themselves and Smith in each of these scenarios. Participants
were further told that there would be four production
runs in which they would be asked to make an inspection
decision; they would make this decision by indicating
whether or not they would request that an inspection be
made.
To test the hypotheses, we informed the participants in the
weak-sanction condition that their inspection decisions
would occasionally be monitored. They received the following
additional information, which those in the no-sanction
condition did not receive:
Occasionally, the division president conducts a random check to
determine whether or not an inspection should have been requested
for your components. If the division president concludes
that you should have requested an inspection but you did not, you
will have to pay a fine worth $30, If the division president concludes
that you should have requested an inspection and you did,
you will not pay a fine. You estimate the probability that the president
will conduct a check is very low, no greater than 5%,
Before making any decisions, participants in the weak-sanction
condition were shown a clear bag of jellybeans. In this
bag, 95 percent of the jellybeans were red and 5 percent
were yeilow. Participants were told that at the end of the
exercise, a jellybean (with replacement) would be drawn for
each production run to determine if a random check had occurred.
If the jellybean that was picked was red, no random
check had occurred and no one would be subjected to a
fine. If the jellybean was yellow, a random check had occurred
and anyone who did not request an inspection would
pay the fine. Participants in the weak-sanction and no-sanction
conditions were in separate classrooms to avoid contamination.
All participants were given the final instruction
that their goal was to maximize unit profitability.
All participants were then asked to record whether they
wished to request an inspection for the first two production
runs. They made two decisions (one for each run) at this
point, recording each on a separate page. Following their decisions,
participants were asked to estimate whether they
believed Smith had requested an inspection in the first two
production runs, and they recorded two estimates, one for
each of the first two production runs.
Participants then received information on Smith's actual decision.
Half of the participants were told that Smith had requested

an inspection in both of the first two production

runs; the other half were told that Smith had not requested
an inspection in either of the first two production runs. Participants
then made separate inspection decisions for the
third and fourth production runs and after completing these
decisions, recorded their expectations of Smith's decision for
these two production runs. Finally, participants were asked
to estimate on a 7-point scale how honest, cooperative, dependable,
and trustworthy Smith was and to rate Smith's
intellectual ability and understanding of their role at the company.
Results
Cooperation. For each of the four production runs, and for
each experimental condition, we recorded whether the participant
cooperated or defected and recorded the proportions
of cooperation for each experimental condition. To assess
the impact of the independent variables on cooperation, we
conducted a 2 (sanctions: yes or no) by 2 (Smith's decision:
cooperate or defect) by 4 (production run, a within -subjects
variable) ANOVA.
The results of this analysis indicated a significant
sanctions x production run effect (F = 3.49, p < .05),
a significant Smith's-decision x production-run effect (F =
6.44, p < .001), and a significant effect for production run (F
= 15.7, p < .001).
The means underlying the interaction between sanctions and
production runs are displayed in figure 1, which shows cooperation
rates over the four runs. The presence of a sanctioning
system seems to produce a decrease in cooperation in
rounds two and three but an increase in cooperation in the
fourth round. In support of hypothesis 1, analysis of the differences
within rounds revealed a significant difference in
cooperation by sanction condition in the second production
run (F = 3.93, p < .05), with 70 percent cooperating in the
no-sanction condition and 48.8 percent cooperating in the
weak-sanction condition. There were no other significant differences
by round. The main effect for production run displayed
in figure 1 shows that the rate of cooperation decreases
over time.
The interaction between Smith's decision and production run
is artifactual and of no theoretical interest. Since Smith's decision
was announced following the second production run,
there can be no effect prior to that time. For production runs
3 and 4, there was much less cooperation when participants
691/ASQ, December 1999
Figure 1. Cooperation rates over production runs, study 1.

believed Smith had defected (27.9 percent) than when Smith

had cooperated (57.3 percent).
Expectations of cooperation. The relationship between a
sanctioning system and expectations should be greatest before
participants are given additional feedback about the other's
behavior (another environmental cue). We used an overall
ANOVA to analyze subjects' expectations of Smith's
cooperation as a function of sanctions. Smith's decision, and
production run (a within-subjects variable). The results revealed
a significant main effect for production run {F = 6.81,
p < .001) and an interaction between Smith's decision and
production run {F = 6.97, p < .001). The interaction of
Smith's decision with production run is artifactual in precisely
the same way as the interaction involving the cooperation
dependent variable. Smith's decision had no impact in
the first two runs, but in the final two runs the expectations
followed the feedback that the participants had been given.
For participants who were informed that Smith had defected,
the mean expected cooperation was 43 percent; for
those who were told that Smith had cooperated, the mean
expected cooperation was 68.3 percent. The main effect for
production run reflected the fact that expectations of cooperation
decreased from run 1 to run 3 but then increased in
run 4. These means are 74.4 percent, 70.7 percent, 50 percent,
and 60.7 percent, respectively.
While the overall analysis failed to reveal any effects for
sanctions, sanction-evoked expectations should be paramount
in the first two runs, before feedback is given about
Smith's actual choices. As this feedback is a more accurate
basis on which to form expectations, this information should
be the primary influence on expectations when it is available.
The data presented above confirm this assertion. Without
692/ASQ, December 1999
Sanctioning Systems

this information, however, expectations may be influenced

by a more subtle cue, such as the presence of a sanctioning

system. To test this notion, we conducted a 2 (sanctions:
yes or no) by 2 (production run) ANOVA on expectations for
just the first two runs before feedback was provided. This
analysis revealed only a significant effect for sanctions (F =
4,50, p < ,05), with participants in the weak-sanction condition
expecting that Smith would cooperate an average 64,3
percent of the time and participants in the no-sanction condition
expecting that Smith would cooperate 81,2 percent of
the time. These data thus support a negative relationship
between sanctioning systems and expectations of cooperation
by others.
There were no differences in the trait ratings (honesty, intelligence,
etc) as a function of the sanctioning condition; however,
these ratings were markedly influenced by the decision
that Smith made, with more desirable ratings occurring
when participants were told that Smith had cooperated.
Discussion
Sanctions decreased cooperation in the early production
runs, with a significantly lower cooperation rate in the second
production run. The relative decrease in cooperation between
the first and second runs in the weak-sanction condition
suggests a pattern in which sanctions, in the absence of
feedback about others' decisions, may encourage defection.
Similarly, expectations of cooperation in the first two production
runs were lower in the weak-sanction condition, suggesting
that a sanctioning system may also have a negative
influence on perceptions, perhaps promoting a distrust of
coworkers.
Cues that influence perceptions of the situation vary in both
strength and their impact on judgments. The presence or
absence of a sanctioning system is not as powerful a cue as
knowledge of the behavior of others. Our data support the
intuition that when feedback is given about Smith's choices,
the influence of the sanctioning system disappears. The data
further suggest that the strength of the sanctioning cue may
be influenced by the proximity to the sanction. While there
was a steady decrease in cooperation in the weak-sanction
condition in the first three rounds, there was an increase in
cooperation in the fourth round. There was no fourth round
increase in the no-sanction condition. One explanation for
this difference centers around the salience of the possible
fine for the weak-sanction participants, who were told that
the occurrence (or lack thereof) of the random checks would
be revealed after the fourth production run. The proximity to
the possibility of a sanction may have increased the cue
strength of the sanctioning system and hence enhanced the
likelihood that the fine was considered.
Overall, the pattern of results is consistent with our expectation,
although the strength of the findings is modest. The
presence of a sanctioning system decreased cooperation
and the expectation of cooperation early in the interaction.
Perhaps the most important feature of the data is that the
pattern we report is inconsistent with predictions from expected

utility maximization. Adding potential costs to the defection

alternative did not decrease the probability of defec693/ASQ, December 1999
tion. This intriguing, counterintuitive effect motivated our
second study.
STUDY 2
In this study, we sought additional support for the findings
of the first study, that cooperation and expectations of cooperation
decreased in the presence of a sanctioning system,
but also examined whether the perception of the situation is
altered by sanctioning systems. The second study used a
multiparty social dilemma scenario in which individuals were
again given the opportunity to cooperate or defect. In addition
to examining this decision under conditions of sanctions
versus no sanctions, we also investigated the influence of
sanctions on perceptions of the decision frame.
Methods
Fifty-six master's of business degree students participated in
a social dilemma scenario as part of a classroom discussion
on social dilemmas. Participants assumed the role of a manager
who supervised a moderate-sized manufacturing plant.
Participants were told that manufacturers in this industry
were faced with the problem of emissions of a toxic gas,
VS-1, which was produced during the production process.
Environmentalists were becoming increasingly concerned
about the problem and were proposing that all smokestacks
be equipped with "scrubbers" that would eliminate the toxic
gas if they operated 100 percent of the time.
With the potential threat of the environmentalists lobbying
for legislation for 100 percent utilization of the scrubbers, the
manufacturers in the industry had come together and
reached an agreement in which all manufacturers would install
scrubbers and run them 80 percent of the time. This
solution was described as being acceptable to the environmentalists
and one way to avoid legislation, which was estimated
to cost $3 million in legislation and compliance costs.
Participants were told that they had two options: (1) run the
scrubbers 80 percent of the time at an estimated cost of
$1.2 million or (2) run the scrubbers less than 80 percent of
the time, with each 20 percent interval of operating time
costing $.3 million (i.e., if the scrubbers were run 20 percent,
a $.3 million cost would be incurred, if they were run
40 percent, a $.6 million cost would be incurred, etc.). Participants
were then made aware that the other manufacturers
had the same choice. If most of the other manufacturers
cooperated by running their scrubbers 80 percent of the
time, there would be no legislation and no compliance costs,
but if most of the other manufacturers defected and ran
their scrubbers less than 80 percent of the time, legislation
and compliance costs would be incurred. Thus, there were
four potential outcomes, as shown in table 2.
Participants were told that their perception of whether or not
legislation would occur corresponded with their perceptions

of the decisions of the other manufacturers. Participants

were told that they did not expect legislation ("no") if most
of the other firms abided by the agreement, but they did expect
legislation ("yes") if most of the other firms did not
abide by the agreement. Participants were then provided
with information on the sanctioning system. In the no-sanc694/ASQ, December 1999
Sanctioning Systems
Table 2

tion condition, participants were told, "There will be no inspections

or enforcement of the agreement." In the weak sanction
condition, participants were given the following
information:
To enforce the agreement to operate the scrubbers 80% of the
time, representatives of the industry will conduct random checks of
some manufacturers. You estimate that there is less than a 5%
chance of being inspected, and that, even if you are inspected and
found to be operating your scrubbers less than 80% of the time,
the fine ($50,000) is negligible.
All participants were then asked to make a decision on the
percentage of time that they would operate their scrubbers
and to explain the basis for their decision. In addition, participants
also estimated the percentage of others in the class
who would operate the scrubbers less than 80 percent of
the time, the environmental damage that would be caused
by operating the scrubber less than 80 percent of the time,
the likelihood of getting caught if the scrubbers were operated
less than 80 percent of the time, and the responsibility
of the plant manager. Environmental damage was assessed
using a multiple choice format with possible responses of
"none," "little," "a moderate amount," "a large amount,"
"do not know," and "does not matter." The likelihood of
getting caught was assessed using a multiple choice scale,
with possible responses of "impossible," "unlikely," "reasonably
likely," "certain," "do not know," and "does not
matter." Responsibility was assessed using a multiple
choice format with possible responses of "to run the plant
profitably, no matter what," "to run the plant profitably, and
also to protect the environment," "to protect the environment,
and to run the plant profitably while doing so," "to
protect the environment, no matter what," and "other,
please describe." Participants were also asked, "If you had
to choose one description for this decision, how would you

describe it?" Their options were as follows: a personal decision,

a business decision, an ethical decision, an environmental
decision, and a legal decision. This was our measure
of perceived decision frame.
Results
Participants recorded the percentage of time that they would
run the scrubbers. Some of the responses were written and
not numerical, for instance, "less than 80 percent." As a result,
we dichotomized the responses as either indicative of
cooperation (responses of 80 percent or more) or defection
(responses of less than 80 percent). We then calculated the
proportion of cooperative responses in the two conditions.
Supporting hypothesis 1, the rate of cooperation was lower
in the weak-sanction condition than in the no-sanction condition
(F= 6,223, p < ,05), Specifically, only 44,4 percent (12/
27) of those in the weak-sanction condition cooperated
whereas 75,9 percent (22/29) of those in the no-sanction
condition cooperated. Furthermore, the presence of a sanctioning
system resulted in decreased expectations of others'
cooperation (F= 6,724, p < ,01), with participants in the
weak-sanction condition expecting that 44,7 percent of the
other students would cooperate as compared with an expectation
of 61,2 percent in the no-sanction condition. We found
no significant differences for the perceived likelihood of defectors
being caught, for the amount of environmental damage
defection would cause, or assessments of the plant
manager's responsibility as a function of the presence or absence
of sanctions.
Table 3

Table 3 displays the distribution of selected decision frames in the two conditions. As all but two of
the participants selected either "Business decision" or "Ethical decision," we excluded these two
participants to examine the difference in the proportion of participants who selected business
decision
over ethical decision. Supporting hypothesis 2, analysis
revealed a significant result (F= 7,73, p < ,01), with 44,8
percent selecting business decision in the no-sanction condition
and 80,0 percent selecting business decision in the
weak-sanction condition. These data confirm the hypothesis
that the presence or absence of the sanction system influences
the decision frame, or perception of the situation.

Table 4 further details individuals' perceptions of the situation

by providing a sample of the participants' written comments
about the basis of their decision.
We conducted analyses to test whether the relationships
between sanctions and behavior and sanctions and expectations
are mediated by the decision frame that is adopted.
This analysis revealed that when we controlled for decision
frame, the significant relationship between sanctions and
cooperation {F - 7,94, p < ,01) became insignificant (F =
2,74, n,s,), but the significant relationship between sanctions
and expectations (F= 8,45, p < ,01) remained significant (F
= 5,00, p < ,05), Examination of responses revealed that the
adoption of an ethical frame led to a 90,5 percent cooperation
rate and an expectation that 61,9 percent of others
would cooperate, whereas the adoption of a business frame
led to a 39.4 percent cooperation rate and an expectation
that 46.8 percent of others would cooperate.
Table 4

A Sample of Participants' Written Comments in the Weak-Sanction

versus No-Sanction Conditions, Study 2
No sanction
"That's what we agreed to and that's what is best for the local
community." (Cooperate)
"It is the right thing to do for the community. In good faith I wouldn't ask
other companies to run 80%, then run my company less than 80%."
(Cooperate)
"There is an ethical point to follow through on the agreement. It could cost
some in the short run at 80% but in the long run the firm would be better
off." (Cooperate)
"As a plant manager, I feel that I would have a dual responsibilityboth to
the profitability of the firm and to the environment." (Defect)
"We are looking for a balance between keeping jobs and protecting the
environment." (Defect)
"You have the opportunity to increase if others show the same sign of good
faith or it becomes a requirement." (Defect)
Weak sanction
"The potential benefits of generating at < 80% are outweighed by the
potential losses." (Cooperate)
"If everyone complies = $1,200,000. If < 80% it will lead to legislation
anyway. So just hope that everyone else will do 80%." (Cooperate)
"The costs incurred at the 80% level without legislation is far better than
any of the costs with legislation. I would pay $1.2 million now to avoid
possibly paying $3 million or more in the future." (Cooperate)
"I would not operate the scrubbers because if my decision will not affect
the other manufacturers' decisions I will receive the best outcome."
(Defect)
"If there is only a 5% chance of being inspected, I would risk the $50
thousand fine and then comply with the standards. If I were caught then I
would operate at 80%." (Defect)
"The chance of inspection is small and so is the fine." (Defect)
An additional analysis that investigated the relationships
among decision frame, decision, and expectations revealed
that the significant relationship between decision frame and

expectations (F= 5.11, p < .05) became insignificant when

decision (cooperate/defect) was controlled for (F = .069,
n.s.). Conversely, the significant relationship between decision
frame and decision (F= 17.94, p < .001) remained significant
when expectations of others was controlled for in
the analysis (F= 11.57, p < .001). These results suggest that
the frame may influence behavior, which in turn may influence
expectations.
Discussion
Results provide support for the notion that a weak sanctioning
system can actually decrease cooperation, decrease expectations
of cooperation, and influence perceptions of the
situation. Results revealed that the presence of weak sanctions
promoted a focus on the business aspects of the decision
in contrast to a focus on the ethical aspects when no
sanctions were present. The written comments further support
the notion that a weak sanctioning system prompts a
perception that the decision concerns the costs versus the
benefits of cooperating, whereas the lack of such a system
prompts relatively more consideration of the ethical aspects
of the decision. Messick's (1999a) arguments help to structure
these findings. Our analysis revealed that the relation- ship
between sanctioning systems and cooperation rates can
be explained by the decision frame that is adopted. Congruous
with Messick (1999a), this finding indicates that the
sanctioning system acts as a situational cue that triggers an
assessment of the type of decision that one is making (i.e.,
ethical or business), which in turn influences cooperation
rates. Thus, the sanctioning system influences the frame,
but it is the frame that determines the behavior.
The analysis did not support the hypothesis that the frame
would explain the relationship between sanctions and expectations
of others, but the finding that the decision mediates
the relationship between the frame and expectations suggests
that there may be a hierarchical order to the cluster of
perceptions and actions that a given frame evokes. While
the expectation-choice relationship is one possible basis for
the relationship between sanctions and behavior, such that
expectations drive behavior (see Van Lange, 1991), these
results are more indicative of a choice-expectation relationship
(see Dawes, McTavish, and Shaklee, 1977; Tenbrunsel,
1998), in which one's behavior influences the expectations
of others. It may be that individuals distort their expectations
of others to justify their own behavior (Tenbrunsel, 1998),
rather than expectations serving as a signal for the appropriate
behavior.
STUDY 3
The first two studies support our proposal that weak sanctioning
systems can actually decrease cooperation. Study 2
also provides possible insight into why this occurs, suggesting
that sanctioning systems may change the type of decision
that one is perceived to make, from that involving an
ethical premise to one with a more rational, calculative, business

foundation. Yamagishi's (1986, 1988) and McCusker

and Carnevale's (1995) results, however, suggest that sanctioning
systems promote cooperation, which is directly opposite
to the results presented thus far in this paper. We believe
that these results can be reconciled with those
presented in this paper by exploring the conditions under
which the various results are expected to hold true. One of
those conditions is the strength of the sanction, such that
sanction strength is related to cooperative behavior; however,
we predict that this will only be true when a business
frame has been evoked.
We are thus arguing that to determine the directional influence
that sanctions have on cooperation, one must consider
both the decision frame that is evoked and the strength of
the sanction. To understand these assertions, it is necessary
to consider the range of possible outcomes that can occur
when a sanctioning system is introduced. As depicted in figure
2, an understanding of the relationship between sanctioning
systems and cooperation rates involves a consideration
of two effects; (1) a signaling effect, in which the
presence of a sanctioning system signals the type of decision
one is making, and (2) a processing effect, in which the
decision processing that occurs, including whether or not the
strength of the sanction is considered depends on the frame
that has been evoked.

P(E) = Probability of an ethical frame

P(C/B) = Probability of cooperation given a business frame
P(C/E) = Probability of cooperation given an ethical frame
The upper half of the model postulates a signaling effect,
such that the presence of a surveillance and sanctioning system
changes the perception of the situation. Empirically supported
by the findings in study 2, the model proposes that a
business frame, as opposed to an ethical frame, is more
likely to be adopted when a sanctioning system is present
than when such a system is absent.
The lower half of the model proposes that the resulting processing
that occurs depends on which decision frame has
been evoked. As depicted, when an ethical frame is evoked,
cooperation should be the dominant choice, independent of
the presence or absence of a sanctioning system and the
expected cost of the sanctions. This assertion resonates
with Kramer and Messick (1996), who examined cooperative
behavior in organizational dilemmas from an ethical perspective.
They asserted that from the standpoint of ethical reasoning,
moral choices are synonymous with cooperative
choices, independent of the basis for that reasoning. Thus,
from a utilitarianism perspective, they argued that the moral
decision is obvious: "to make the cooperative choice since
that is the alternative that, by definition, maximizes the collective

welfare" (Kramer and Messick, 1996: 66), Similarly,

from a deontological perspective, the cooperative choice is
also seen as the moral choice because it is both universalizable
(the decision maker's reasons for acting are the reasons

everyone could act on this principle) and reversible (the decision

maker's reasons are reasons that the decision maker
would want others to act on). Thus, when one is reasoning
from an ethical perspective, the dominant choice should be
cooperation.
When a business frame is evoked, however, there is no
dominant strategy. Rather, a business frame produces a calculative
cost-benefit process in which cooperation rates depend
on the strength of the sanction. This argument coincides
with the literature on punishment, which posits that
individuals engage in a utility calculation that compares the
costs and benefits of the punishment (e.g., see Trevino,
1992). The processing heuristic that is characteristic of the
business frame should result in cooperation rates that are in
tandem with the costs: the higher the cost of defecting (i.e.,
the stronger the sanction), the higher the expected cooperation.
The processing effects within a business frame versus
an ethical frame should therefore be quite different:
Hypothesis 3: Within an ethical frame, cooperation will be the
dominant choice and will not be influenced by economic considerations
such as sanction strength, while within a business frame,
cooperation will depend on the strength of the sanctioning system.
Thus, in contrast to situations in which there are weak sanctions,
we expect cooperative behavior when there are no
sanctions or when there are strong sanctions, but that the
basis for the cooperative behavior in these two situations
will be very different. When no sanctions are present, individuals
cooperate because it is the ethical action to take.
When strong sanctions are present, individuals cooperate
because it is the more profitable business strategy. Thus,
while a strong sanctioning system may promote the desired
level of cooperation, the basis for this cooperation is different
than the basis for cooperation when a sanctioning system
is not present. To test the processing effect prediction,
we conducted a third study to analyze the influence of sanction
strength. We accomplished this by adding a strong
sanctioning condition to the design used in the second
study.
Methods
One hundred and thirty-three master's of business degree
students participated in the same social dilemma scenario
described in study 2. The description of the scenario was
identical to that used in the second study, and the same two
conditions, no-sanction and weak-sanction, present in that
study were also present in this study. This study, however,
introduced a third, strong-sanction condition. Participants in
this condition were given the following information:
To enforce the agreement to operate the scrubbers 80% of the
time, representatives of the industry will conduct random checks of

some manufacturers. You estimate that there is at least a 50%

chance of being inspected and that, if you are inspected and found
to be operating your scrubbers less than 80% of the time, the fine
($2,000,000) will be substantial.
As in study 2, participants were asked to make a decision on
the percentage of time that they would operate their scrubbers,
the percentage of time that others would operate their
scrubbers, and the type of decision that they perceived
themselves to be making.
Results
Cooperation rates did significantly vary by version {X^ = 6.23,
p < .05), with cooperation rates of 64.4 percent in the nosanction
condition, 54.6 percent in the weak-sanction condition,
and 79.5 percent in the strong-sanction condition.
These results follow the curvilinear pattern implied by the
model, with cooperation higher in the no-sanction and
strong-sanction conditions than in the weak-sanction condition.
Results also revealed that the presence of a sanctioning
system (weak and strong) did increase the likelihood that a
business frame rather than an ethical frame was evoked,
with only 29.1 percent in the no-sanction condition identifying
the decision as a business one compared with 42.5 percent
of individuals in the weak- and strong-sanction conditions.
This difference, while consistent with hypothesis 2,
was only marginally significant (F= 2.15, p < .15).
Results supported the hypothesis that motivated this study,
namely, that different frames are characterized by different
processing effects and lead to different cooperation rates.
There was a significant difference in the degree of cooperation
exhibited between individuals who adopted a business
frame and those who adopted an ethical frame [F - 16.9, p
< .001). When an ethical frame was adopted, 90 percent of
the individuals in all three conditions cooperated, whereas
when a business frame was adopted, only 53.3 percent of
the individuals cooperated. To assess whether cooperation
was a dominant strategy (i.e., greater than defection), we
conducted f-tests that analyzed whether the cooperation rate
was different from 50 percent. This analysis revealed that for
individuals who adopted an ethical frame, the cooperation
rate was different from 50 percent {t = 8.33, p < .001), supporting
the assertion that cooperation is the dominant choice
within an ethical frame. Moreover, there was no indication
that the cooperation rate within a business frame was significantly
different from 50 percent (f = 0.57, n.s.), suggesting
that neither cooperation nor defection were dominant
when a business frame had been evoked. There was also no
significant difference between frames for expectations of
others' cooperative behavior (F< 1, n.s.).
Further supporting this hypothesis were results showing that
the strength of the sanction did influence cooperative behavior
within a business frame (F = 3.04, p < .05), with no indication
that the strength of the sanction influenced cooperative
behavior within an ethical frame (F= 0.73, n.s.). When a

business frame had been adopted, cooperation rates were

43.5 percent, 42.3 percent, and 71.4 percent in the no-sanction,
weak-sanction, and strong-sanction conditions, respectively;
when an ethical frame had been adopted, cooperation
rates were 94.1 percent, 80 percent, and 92.3 percent in the
no-sanction, weak-sanction, and strong-sanction conditions,
respectively. Also supporting the hypothesis is the significant
difference (F = 4.93, p < .05) in cooperative behavior between
the weak- and strong-sanction conditions when a
business frame had been adopted.
A similar result was found in the analysis of expectations of
others' cooperative behavior within a business versus an
ethical frame. When a business frame had been adopted,
expectations were significantly influenced by sanction
strength (F= 4,07, p < ,01), with expectations of cooperation
equal to 37,6 percent, 53 percent, and 60,4 percent in
the no-sanction, weak-sanction, and strong-sanction conditions,
respectively. When an ethical frame had been
adopted, however, there was no indication that expectations
were influenced by sanction strength (F= 1,48, n,s,). While
these results are similar to those found in relation to cooperative
behavior, the pattern is somewhat different: when
the weak-sanction condition is compared with the no-sanction
condition, cooperative behavior is equal to or slightly
lower in the weak-sanction condition than in the no-sanction
condition, but expectations of cooperative behavior are
higher.
Discussion
The results support the notion that different frames induce
different processing effects and, in doing so, have different
effects on cooperative behavior. The adoption of an ethical
frame appears to lead to a relatively straightforward "cooperative"
heuristic that is not influenced by the strength of
the sanction. Conversely, a business frame induces a calculative
decision process whereby the strength of the sanction
influences the degree of cooperative behavior. These results
suggest that while there are no ethical reasons for defecting,
there may very well be business reasons for cooperating
(i,e,, cost). These results thus help to reconcile the findings
of Yamagishi (1986, 1988) and McCusker and Carnevale
(1995), which demonstrate that strong sanctioning systems
result in cooperation, and those found in the first two studies,
which demonstrate that weak sanctioning systems can
reduce cooperation. Likewise, the results also support the
punishment literature, where it has been argued that one of
the reasons that punishment may deter misconduct is because
of the increased risks that enter into a cost-benefit
calculation (Trevino, 1992), But the findings add a caveat to
the assertion that the strength of the sanction and cooperative
behavior are positively related, suggesting that this is
only true when a business frame has been evoked.
As in study 2, the pattern between sanctioning systems and
expectations of others was not congruous with the pattern
between sanctioning systems and cooperative behavior. Furthermore,

while there is evidence from both studies that the

two are closely related, the evidence suggests that the proposed
model more accurately captures behavior than expectations.
One possibility for the lack of similarity in patterns is
that expectations are influenced by other situational cues
(e,g,, reputation of others, group culture) that were not measured
in these studies. Another possibility, supported by
study 2, is that there is a more complex, double-mediational
relationship among sanctions, decision frames, behavior, and
expectations than previously hypothesized. While the purpose
of this paper was to investigate the role of sanctions
and decision frames in influencing cooperative behavior,
rather than the relationship between behavior and expectations,
the strong relationship between these two and the
results of these studies suggest that this relationship merits
more attention.
Although the results of study 3 were in the predicted direction,
they did not provide additional statistical support for the
results from the second study, namely, that a sanctioning
system would be more likely to evoke a business than an
ethical frame. Given the use of identical materials, this result
may seem surprising, but research suggests that the cues to
evoke different perspectives or frames may be very subtle.
Samuelson and Allison (1994) found, for example, that
changing the label given to the first person allowed to harvest
from a common resource pool from "leader" to "supervisor"
increased the amount of self-restraint exhibited by
that person. Similarly, Eiser and Bhavnani (1974) found that
cooperation rates in a prisoner's dilemma were higher when
it was described as an international negotiation than as an
economic bargaining situation. The results from the first
study also hint at the subtle nature of environmental cues. In
that study, the presence of one cueinformation about others'
decisionsdiminished the impact of the sanctions cue.
In addition, the sudden increase in cooperation as the possibility
of a sanction drew closer suggests that proximity to a
cue may be another factor that changes a cue's influence.
Like the conclusion reached by Kramer and Messick (1996),
these findings suggest that cues that influence perceptions
of a situation can be very subtle. While the results from the
second study demonstrated that sanctioning systems did
influence perceptions of the decision frame and those from
this study were in the predicted direction, the lack of significance
in this study suggests that there are a variety of other
cues that may reduce the magnitude of this effect. The timing
of the data collection relative to the semester (i.e., beginning
versus middle), the last lecture that one had, and the
focus on political ethics in the media are just a few of the
other cues that may have also influenced the perception of
the situation. Thus, sanctioning systems are just one of the
many influences on decision construals. While the subtlety
of these cues increases the complexity of determining what
particular frame has been adopted, the results suggest that
once this is understood, predicting the resulting behavior
may in fact be simplified.

CONCLUSION
As Barnard (1938: viii ) wrote, "Essential to the survival oi
organization is the willingness to cooperate." Understanding
forces that promote or reduce the tendency to cooperate,
then, is vital to ensuring the success of organizations and
society. Our results suggest that, left unattended, the tendency
to cooperate and to expect cooperation from others
decreases as time goes on. The emphasis on monitoring and
control in organizational theories supports the implementation
of surveillance and sanctioning systems as a possible
mechanism for curbing this decreased tendency to cooperate.
As is evident from the studies presented here, however,
these systems, at least those characterized by a low probability
of detection and small fines, may actually produce an
increase in undesirable behaviors.
Using this finding as a springboard, we modeled the complex
relationship between sanctions and cooperative behav703/ASQ, December 1999

ior as influenced by both a signaling effectin which sanctions

can change the type of decision frame that is
adoptedand a processing effectin which the frame influences
which choice rules are used. We found support for
the notion that the presence of a sanctioning system influences
the decision frame that is adopted, increasing the likelihood
that a business frame, versus an ethical decision
frame, is evoked. In turn, the different frames that are
adopted result in different processing values: within an ethical
frame, cooperation becomes the dominant choice, independent
of the strength of the sanction, whereas in a business
frame, cooperation is determined by an analytic, costbenefit
process in which sanction strength is taken into
consideration. These results not only provide support for the
influence of strong sanctions on behavior (Yamagishi, 1986,
1988; McCusker and Carnevale, 1995) and for the relationship
between the framing or wording of a situation and cooperation
rates (Larrick and Blount, 1997; Pillutia and Chen,
1999), in so doing, they also offer an enhanced cognitive
perspective that organizes and helps inform this research.
The findings from these studies have important organizational
implications. First, they imply that weak sanctions intended
to increase cooperation may actually reduce it. Second,
they imply that strong sanctions may increase
cooperation but that the basis for this cooperation (i.e., it is
the economically rational course of action) is different than
the basis for cooperation when no sanctions are present (it
is the right thing to do). With the first motivation, a change
in payoffs or surveillance could lead to a dramatic reduction
in cooperation. These results thus suggest that organizations
need to examine very carefully the expected benefits and
costs of sanctioning systems, including decreased cooperation
and a favoring of the economic over the ethical aspects
of a decision. Ironically, these systems have been identified
as one mechanism by which ethics can be instilled in organizations
(Lindsay, Irvine, and Lindsay, 1996). The findings that
such a system may actually decrease the extent to which

ethical considerations are taken into account implies that we

need to exhibit caution when implementing this recommendation.
At the very least, these studies suggest that organizations
should think twice before implementing weak sanctioning
systems, for they will not only pay the cost of the system
but also incur the cost of decreased cooperation. One may
argue, as Gellerman (1986) has, that the most effective solution
is simply to implement a system in which the probability
of getting caught is much higher. While our results suggest
that this may have the desired result of increasing cooperation
when individuals believe that they will be caught, we
also found that the basis for this cooperation is different
than the basis for cooperation when no sanctioning system
is present. Individuals cooperate because it makes economic
or business sense to do so, not because it is the moral or
ethical thing to do. These cognitive changes, which were the
focus of this paper, may have motivational implications that
can also produce undesirable effects. In addition to being
prohibitively expensive, a strong sanctioning system may
further enhance individuals' perception that their behavior is
being externally controlled, Brehm's (1966) reactance theory
posits that controlling or restricting behavior may induce a
motivational state in which the restricted individuals attempt
to reestablish their threatened freedom. This reactance may
not only show up in increased defection when individuals
feel they will not be caught, it may also lead to deviant actions
in which individuals attempt to trick, manipulate, or bypass
the system. As Cialdini (1996: 57) wrote, this in turn
may only result in "supervisors scurrying to find even more
sophisticated (and expensive) control systems,"
Rather than advocating that organizations engage in such a
self-defeating cycle, we believe that attention should instead
be focused on understanding the psychological reactions to
control systems. Research that investigates cues that
change individuals' construals of these systems will be useful
in further resolving disparate findings on the effects of
such systems. These cues may originate from environmental,
structural, and/or personal factors. As suggested by Messick
(1999a) and demonstrated by Larrick and Blount (1997),
the "cover story" and, more generally, the linguistic cues
(i,e,, "accepting" versus "claiming") that are used may be
influential in decision construals. Thus, how the problem is
presented to an individual may influence perceptions of the
decision frame. This frame may likewise be influenced by
the type of social dilemma presented, Messick (1999b) suggested
that social dilemmas differ in terms of their temporal,
collective, moral, and outcome perspectives. These perspectives
in turn may influence perceptions of the situation. For
example, dilemmas that are multitrial and involve a collective
decision (i,e,, conserving resources) may be more likely to
produce an ethical frame than single-shot, individual-based
dilemmas. Similarly, volunteer dilemmas, in which individuals
are asked to volunteer resources (i,e,, time), may evoke an
ethical frame, whereas competitive strategy dilemmas may
evoke a business frame. More related to the focus of this
study, the type of sanction that is used may also influence

perceptions of the decision that is to be made. There is an

ongoing debate as to the relative effectiveness of reward
versus punishment (e,g,, see Beyer and Trice, 1984; Trevino,
1992), which might be resolved by examining the different
decision frames that these types of sanctions can evoke.
The factors that determine sanction strengthi,e,, size of
the sanction versus the probability of getting caughtmay
also differentially influence the salience and, hence, relevance
of a sanction cue. An individual's social value orientation
has also been found to influence cooperation in social
dilemmas (Kramer, McClintock, and Messick, 1986; McClintock
and Liebrand, 1988), which may be explained by the
different decision frames that different value orientations induce.
Research that investigates these and other factors that
affect the construal of the situation will be useful in providing
a contingency framework for understanding when sanctioning
systems make sense and when they do not.
More fundamentally, we need to reexamine the assumptions
that have been made in organizational theories of control,
Beatty and Zajac (1994) argued that most of the literature on
executive compensation neglects the goals of the individual,
assuming that individuals prefer less effort to more effort
and more money to less money. We believe that this type of
blanket assumption characterizes much of the research on
control systems, in which it is assumed that the decreased
payoffs as a result of surveillance and sanctioning will decrease
defection. Our results contradict this assumption and
suggest that if we are to truly understand the factors that
influence cooperation, we need to explore the assumptions
that we have made about individuals and their reactions to
mechanisms designed to promote cooperative behavior. As
Pfeffer (1994) asserted, these mechanisms and policies
need to take into account our knowledge of human behavior.
We agree and believe that there is a need for more empirical
research aimed at furthering "what we know about people"
(Pfeffer, 1994: 115), particularly in understanding the unintended
influence of control systems on individuals' perceptions
and behavior.