Abstract
Understanding the emergence of prosocial behaviours among self-interested individuals is an important problem in many scientific disciplines. Various mechanisms have been proposed to explain the evolution of such behaviours, primarily seeking the conditions under which a given mechanism can induce highest levels of cooperation. As these mechanisms usually involve costs that alter individual pay-offs, it is, however, possible that aiming for highest levels of cooperation might be detrimental for social welfare-the latter broadly defined as the total population pay-off, taking into account all costs involved for inducing increased prosocial behaviours. Herein, by comparing stochastic evolutionary models of two well-established mechanisms of prosocial behaviour-namely, peer and institutional incentives-we demonstrate that the objectives of maximizing cooperation and of maximizing social welfare are often misaligned. First, while peer punishment is often more effective than peer reward in promoting cooperation-especially with a higher impact-to-cost ratio-the opposite is true for social welfare. In fact, welfare typically decreases (increases) with this ratio for punishment (reward). Second, for institutional incentives, while maintaining similar levels of cooperation, rewards result in positive social welfare across a much broader range of parameters. Furthermore, both types of incentives often achieve optimal social welfare when their impact is moderate rather than maximal, indicating that careful planning is essential for costly institutional mechanisms to optimize social outcomes. These findings are consistent across varying mutation rates, selection intensities and game configurations. Overall, we argue for the need of adopting social welfare as the main optimization objective when designing and implementing evolutionary mechanisms for social and collective goods.