Ohtshuki and others (in the Jan 1, 2009 edition of Nature), attempt to determine how effective punishment is in achieving a stable and cooperative society through mathematical modelling.
Their results: punishment is seldom effective in achieving this goal.
That doesn't mean, however, that people with poor reputations get away with bad behaviour. The most stable behavioural models, in most conditions, arose when people cooperated with those with good reputations and simply chose not to interact with those with a bad reputation.
This strategy broke down if the public was unable to determine who should have a good or bad reputation. Thus, evolution has equipped most people with fairly good radar in this regard.
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