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Do economic inequalities affect long-run cooperation and prosperity?

Gabriele Camera (), Cary Deck and David Porter

Experimental Economics, 2020, vol. 23, issue 1, No 3, 53-83

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: C70 C90 D03 E02 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10683-019-09610-5

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