Breaking Up: Experimental Insights into Economic (Dis)Integration

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

Working papers from Faculty of Business and Economics - University of Basel

Abstract: Standard international economic theory suggests that people should embrace economic integration because it promises large gains. But recent events such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment, based on a strategic analytical framework, of how size and distribution of potential gains from integration influence outcomes and individuals' inclination to embrace integration. We find that cross-country inequality in potential gains acts as a friction to realize those gains. This suggests that to better understand recent phenomena, international economic theory should account for distributional considerations and behavioral aspects it currently ignores.

Keywords: 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: 2019-11-30
New Economics Papers: this item is included in nep-exp and nep-gth
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Working Paper: Breaking Up: Experimental Insights into Economic (Dis)Integration (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2019/21

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