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A Tale of Two Cities: An Experiment on Inequality and Preferences

Maria Bigoni () and Veronica Rattini ()
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Veronica Rattini: University of Pittsburgh

Authors registered in the RePEc Author Service: Stefania Bortolotti ()

No 11758, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In an online experiment, we exploit the existing disparities in socio-economic status within an Italian city, to study how these differences correlate with preferences in strategic and non-strategic situations. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart's trustworthiness than those living in a lower socio-economic environment. By contrast, no significant differences emerge in other preferences: generosity, risk-attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.

Keywords: beliefs; discrimination; generosity; risk attitudes; time preferences; trust; trustworthiness (search for similar items in EconPapers)
JEL-codes: C90 D31 D63 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-soc
Date: 2018-08
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