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Do Economic Inequalities Affect Long-Run Cooperation & Prosperity?

Gabriele Camera (), Cary Deck and David Porter

Working Papers from Chapman University, Economic Science Institute

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)
New Economics Papers: this item is included in nep-exp, nep-gth, nep-hpe, nep-ltv and nep-mac
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:19-09

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