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Do Economic Inequalities Affect Long-Run Cooperation?

Gabriele Camera (), Cary Deck and David Porter

Working Papers from Chapman University, Economic Science Institute

Abstract: Does inequality affect a group’s cohesion and ability to prosper? Participants in laboratory economies played an indefinite sequence of helping games in random, anonymous pairs. A coin flip determined donor and recipient roles in each pair. This random shock ensured equality of opportunity but not of results, because earnings depended on realized shocks. We manipulated the ability to condition choices on this uncontrollable inequality source. In all treatments, uncertain ending supports multiple Pareto-ranked equilibria, including full cooperation. Theoretically, inequalities do not alter the incentives’ structure. Empirically, inequality disclosures altered conduct, weakened norms of mutual support and reduced efficiency.

Keywords: experiments; indefinitely repeated games; social norms; social dilemmas (search for similar items in EconPapers)
JEL-codes: C70 C90 D03 E02 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-exp, nep-hpe, nep-ltv, nep-mac and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:16-18

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