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Inequality, trust and growth: An experimental study

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  • Sadrieh, A.
  • Verbon, H.A.A.

    (Tilburg University, Center for Economic Research)

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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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2002-84.

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

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Related research

Keywords: public goods; game theory;

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Cited by:
  1. Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2003. "Inequality, Group Cohesion, and Public Good Provision: An Experimental Analysis," Working Papers 0308, Harris School of Public Policy Studies, University of Chicago.
  2. Uwe Cantner & Andreas Meder, 2007. "Technological proximity and the choice of cooperation partner," Journal of Economic Interaction and Coordination, Springer, vol. 2(1), pages 45-65, June.

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