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The trade-off between welfare and equality in a public good experiment

Agathe Rouaix, Charles Figuieres () and Marc Willinger ()

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: We report the results of an experiment on voluntary contributions to a public good in which we implement a redistribution of the group endowment among group members in a lump sum manner. We study the impact of redistribution on group contribution, on individuals’ contribu- tions according to their endowment and on welfare. Our experimental results show that welfare increases when equality is broken, as predicted by theory (Itaya, De Meza & Myles, 1997), because the larger contribution of the rich subjects overcompensates the lower contribution of the poor subjects. Last but not least, agents’ behavior in situations of inequality of income, depends on initial conditions. In particular, the decisions of those who become poor seem to express a form of protest against the new distribution of incomes compared to those who started out as poor: from a behavioral point of view, being poor is therefore not equivalent to becoming poor.

Date: 2013-02, Revised 2013-02
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http://www.lameta.univ-montp1.fr/Documents/DR2013-03.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: The trade-off between welfare and equality in a public good experiment (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:lam:wpaper:13-03

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