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Do economic inequalities affect long-run cooperation and prosperity?

  • Gabriele CameraEmail author
  • Cary Deck
  • David Porter
Original Paper
  • 52 Downloads

Abstract

We explore if fairness and inequality motivations affect cooperation in indefinitely repeated games. Each round, we randomly divided experimental participants into donor–recipient pairs. Donors could make a gift to recipients, and ex-ante earnings are highest when all donors give. Roles were randomly reassigned every period, which induced inequality in ex-post earnings. Theoretically, income-maximizing players do not have to condition on this inequality because it is payoff-irrelevant. Empirically, payoff-irrelevant inequality affected participants’ ability to coordinate on efficient play: donors conditioned gifts on their own past roles and, with inequalities made visible, discriminated against those who were better off.

Keywords

Cooperation Experiments Indefinitely repeated games Social dilemmas 

JEL Classification

C70 C90 D03 E02 

Notes

Acknowledgments

We thank Co-Editor M. C. Villeval and two anonymous referees for helpful suggestions that improved this study from an earlier version. We also thank N. Wilcox for helpful conversations, K. Bregu for help running the experiments and seminar participants at Chapman University, the Federal Reserve Bank of Cleveland, Humboldt University, the University of Basel, and the Theory and Experiments in Monetary Economics Conference at GMU. G. Camera acknowledges partial research support through the NSF Grant CCF-1101627.

Supplementary material

10683_2019_9610_MOESM1_ESM.pdf (564 kb)
Supplementary material 1 (pdf 563 KB)

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Copyright information

© Economic Science Association 2019

Authors and Affiliations

  1. 1.Economic Science InstituteChapman UniversityOrangeUSA
  2. 2.University of BolognaBolognaItaly
  3. 3.University of AlabamaTuscaloosaUSA

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