The Impact of Inequality on Cooperation: An Experimental Study

Annarita Colasante () and Alberto Russo

No 401, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: This paper analyzes the impact of inequality in the distribution of endowments on contributions. We conduct a lab experiment using the well-known Public Good Game to test the relation between inequality and contribution to a public fund. We introduce the possibility to choose among three different redistribution rules: equidistribution, proportional to contribution and progressive to endowment. This novelty, combined with a payoff function that depends also on previous period behavior, allows us to verify the hypothesis that players show inequity averse preferences. Results show that inequality has a negative impact on individual contribution. Since inequality is decreasing during repetitions, we deduce that players show inequity averse preferences.

Keywords: Inequality; Public Good Game; Reciprocity (search for similar items in EconPapers)
JEL-codes: C9 D7 H41 (search for similar items in EconPapers)
Pages: 35
Date: 2014-05
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wpaper:401

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