  Peer punishment of free-riders (defectors) is a key mechanism for promoting
cooperation in society. However, it is highly unstable since some cooperators
may contribute to a common project but refuse to punish defectors. Centralized
sanctioning institutions (for example, tax-funded police and criminal courts)
can solve this problem by punishing both defectors and cooperators who refuse
to punish. These institutions have been shown to emerge naturally through
social learning and then displace all other forms of punishment, including peer
punishment. However, this result provokes a number of questions. If centralized
sanctioning is so successful, then why do many highly authoritarian states
suffer from low levels of cooperation? Why do states with high levels of public
good provision tend to rely more on citizen-driven peer punishment? And what
happens if centralized institutions can be circumvented by individual acts of
bribery? Here, we consider how corruption influences the evolution of
cooperation and punishment. Our model shows that the effectiveness of
centralized punishment in promoting cooperation breaks down when some actors in
the model are allowed to bribe centralized authorities. Counterintuitively,
increasing the sanctioning power of the central institution makes things even
worse, since this prevents peer punishers from playing a role in maintaining
cooperation. As a result, a weaker centralized authority is actually more
effective because it allows peer punishment to restore cooperation in the
presence of corruption. Our results provide an evolutionary rationale for why
public goods provision rarely flourishes in polities that rely only on strong
centralized institutions. Instead, cooperation requires both decentralized and
centralized enforcement. These results help to explain why citizen
participation is a fundamental necessity for policing the commons.
