Inequality as a barrier to economic integration? An experiment

Gabriele Camera, Lukas Hohl () and Rolf Weder ()
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Lukas Hohl: University of Basel
Rolf Weder: University of Basel

Experimental Economics, 2023, vol. 26, issue 2, No 7, 383-411

Abstract: Abstract International economic theory suggests that people should embrace economic integration because it promises large gains. But policy reversals such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment of how size and cross-country distribution of gains from integration influence individuals’ inclination to cooperate to reap its intended benefits and to embrace or reject integration. The design considers an indefinitely repeated helping game with multiple equilibria and strategic uncertainty. The data reveal that inequality of potential gains neither affected behavior nor reduced support for economic integration. However, integration may lead to disappointing, unequally distributed welfare gains, undermining support for the policy. This suggests that to better assess integration policies, we should account for the spillover effects of integration on behavior. Miscalculating this behavioral aspect may undermine the intended development goals and motivate calls for dramatic policy-reversals.

Keywords: Economic opportunity; Endogenous institutions; Globalization; Indefinitely repeated games; Social dilemmas (search for similar items in EconPapers)
JEL-codes: C70 C90 F02 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Working Paper: Inequality as a Barrier to Economic Integration? An Experiment (2022)
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DOI: 10.1007/s10683-022-09777-4

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