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Inequality as a barrier to economic integration? An experiment

Author

Listed:
  • Gabriele Camera

    (Chapman University)

  • Lukas Hohl

    (University of Basel)

  • Rolf Weder

    (University of Basel)

Abstract

International economic theory suggests that people should embrace economic integration because it promises large gains. But policy reversals such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment of how size and cross-country distribution of gains from integration influence individuals’ inclination to cooperate to reap its intended benefits and to embrace or reject integration. The design considers an indefinitely repeated helping game with multiple equilibria and strategic uncertainty. The data reveal that inequality of potential gains neither affected behavior nor reduced support for economic integration. However, integration may lead to disappointing, unequally distributed welfare gains, undermining support for the policy. This suggests that to better assess integration policies, we should account for the spillover effects of integration on behavior. Miscalculating this behavioral aspect may undermine the intended development goals and motivate calls for dramatic policy-reversals.

Suggested Citation

  • Gabriele Camera & Lukas Hohl & Rolf Weder, 2023. "Inequality as a barrier to economic integration? An experiment," Experimental Economics, Springer;Economic Science Association, vol. 26(2), pages 383-411, April.
    • Handle: RePEc:kap:expeco:v:26:y:2023:i:2:d:10.1007_s10683-022-09777-4
    DOI: 10.1007/s10683-022-09777-4
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    More about this item

    Keywords

    Economic opportunity; Endogenous institutions; Globalization; Indefinitely repeated games; Social dilemmas;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • F02 - International Economics - - General - - - International Economic Order and Integration

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