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Inequality, trust, and growth: : an experimental study

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Author Info
Sadrieh, A.
Verbon, H.A.A. (Tilburg University, Center for Economic Research)

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Abstract

In a three player dynamic public goods experiment, social output today determines production possibilities tomorrow. In each period, players choose to sabotage, to co-operate, or to play best response. Sabotage harms social output and growth. Mutual co-operation maximises both. The property rights to social output are distributed unequally. Extent and skew of inequality are varied. Empirical studies indicate a negative impact of inequality on trust and growth. We observe equilibrium play in most cases. There is also substantial co-operation, but little sabotage. Our exogenous variations of inequality are neutral to growth, neither negatively correlated to co-operation, nor positively correlated to sabotage.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 84.

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Date of creation: 2002
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Handle: RePEc:dgr:kubcen:200284

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jeffrey Milyo & Jennifer M. Mellor & Lisa Anderson, 2004. "Inequality, Group Cohesion, and Public Good Provision: An Experimental Analysis," Working Papers 0418, Department of Economics, University of Missouri, revised 27 Dec 2004. [Downloadable!]
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