Many conservation interventions seek to change resource users' behaviour through the creation and enforcement of rules. Their success depends on changing the incentives of potential rule-breakers and those who monitor and enforce compliance. Project implementers may use payments to encourage monitoring and sanctions to deter rule breaking but there has been little research to examine the effectiveness of such approaches in promoting compliance with conservation rules. The effects of payments and sanctions on poaching in a hypothetical community-based conservation project were investigated using an individual-based model incorporating individual heterogeneity and a realistic range of behaviours. Individuals could choose to poach, monitor others' behaviour, or ‘cheat’ (claim a fee without actually monitoring behaviour). They could also invest in avoidance to reduce their probability of being detected breaking rules. Community-level outcomes emerged from individuals’ choices and strategic interactions. The model demonstrates that payments and sanctions can interact strongly with one another and that their effects depend on the economic context in which they are applied. Sanctions were more reliable than payments in reducing poaching and, in some circumstances, payments produced perverse effects. It is thus important to consider individual-level heterogeneity and strategic decision-making when designing interventions aimed at changing human behaviour.