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We are interested in the interaction effects of performance incentives and reciprocity-based voluntary cooperation. Our comprehensive experimental design first establishes the existence of pay-for-performance and voluntary cooperation. We then study how pay-for-performance affects voluntary cooperation in the short- and the long-run. We find that in the presence of incentives voluntary cooperation is largely reduced (short-run crowding out). Reciprocity is reduced even in the long-run, after incentives have been abolished. We study these effects in one-shot and in repeated games. We find that reciprocity and strategic cooperation in the repeated game are substantially stronger than the crowding-out effects.