Third-Party Punishment or Compensation? It Depends on the Reputational Benefits

Third-party fairness maintenance could win some reputational benefits, and it includes two methods: punishment and compensation. We predicted that the third parties' preference between punishment and compensation are affected by whether they are free to choose between the two methods, and the affection could be interpreted through reputational benefits. The present study includes two sections. In Study 1, the participants acted as fourth parties who were asked to rate the reputations of the third parties who had chosen different response methods to an unfair result of the dictator game. The results showed that (1) there was no reputational difference between the two methods when third parties were not free to choose, (2) but the reputation of compensation was better when third parties were free to choose. In Study 2, the participants acted as third parties. The participants were asked to choose a method to respond to an unfair result of the dictator game. There were two reputational contexts: secret and open. The results showed that (1) when third parties were not free to choose, they had no preference between the two methods under the two reputational contexts, (2) but when third parties were free to choose freely, they prefer punishment under the secret context but prefer compensation under the open context. This study systematically reveals a reputational interaction between fourth and third parties, and verifies the affection of reputational benefits on the third parties' preference between punishment and compensation.