Experience and History: An Experimental Approach to Generational Heterogeneity

Marianna Baggio and Luigi Mittone
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Marianna Baggio: University of Trento, Trento, Italy

International Journal of Applied Behavioral Economics (IJABE), 2016, vol. 5, issue 4, 1-23

Abstract: The development and use of long-lived public goods involves more than one demographic generation, leaving the classic literature on voluntary provisions partially unfit to explain complex phenomena such as welfare systems, climate policies and major infrastructure projects. This paper proposes a model that explains how equilibrium is reached in a context where heterogeneity is linked to seniority and strategic interaction is finitely repeated. Within this model the case of intergeneration public goods production is explained using a redistribution rule that benefits the younger players, as a compensation for their inexperience. Experimental evidence shows that subjects who belong to low or middling marginal per capita return types are negatively affected by heterogeneity, whereas groups benefit from the presence of experienced subjects. More importantly, results show that becoming disadvantaged (lowering the marginal per capita return of individuals in time) has negative effects on the provision of public goods, if compared to a situation where the disadvantage is constant in time (same low marginal per capita return in time).

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jabe00:v:5:y:2016:i:4:p:1-23

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