Size Matters! Only Big Threats Encourage Cooperation

Subjects play a repeated stranger-matching prisoners’ dilemma game with opt-in fee for both players framed as escrow account payments. After a game, all fees can be consensually returned or unilaterally destroyed. With low fees, cooperation breaks down at a similar rate as without fees. However, cooperation rates remain stable with high fees. The effect is primarily driven by cooperators remaining active and willing to cooperate, not by defectors drop- ping out or turning to cooperation. Destruction of the fees is rare and never triggered by defectors, but occurs slightly more with high fees. Fees have no effect on participation rates.