It makes honest people feel rewarded, valued and acknowledge. It teaches people who wish to follow the rules and conform to social norms what those norms are and where we actually draw the line in practice.
https://en.wikipedia.org/wiki/Punishment#Education_and_denun...
Looked at slightly differently, given a split between high trust and low trust preventing conversions from high to low is similarly important to inducing conversions from low to high.