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Breaking Up: Experimental Insights into Economic (Dis)Integration

Author

Listed:
  • Camera, Gabriel
  • Hohl, Lukas

    () (University of Basel)

  • Weder, Rolf

    () (University of Basel)

Abstract

Standard international economic theory suggests that people should embrace economic integration because it promises large gains. But recent events such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment, based on a strategic analytical framework, of how size and distribution of potential gains from integration influence outcomes and individuals' inclination to embrace integration. We find that cross-country inequality in potential gains acts as a friction to realize those gains. This suggests that to better understand recent phenomena, international economic theory should account for distributional considerations and behavioral aspects it currently ignores.

Suggested Citation

  • Camera, Gabriel & Hohl, Lukas & Weder, Rolf, 2019. "Breaking Up: Experimental Insights into Economic (Dis)Integration," Working papers 2019/21, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2019/21
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    More about this item

    Keywords

    endogenous institutions; globalization; indefinitely repeated games; social dilemmas;

    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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