Experimental Study of Bilateral Cooperation Under a Political Conflict: The Case of Israelis and Palestinians

We investigate strategic interactions of Israelis and Palestinians within a controlled laboratory experiment. In our first treatment we retrieve cooperation benchmarks prevailing within both subject pools. Then we measure cooperation levels and associated beliefs between Israelis and Palestinians. Treatment three assesses the influence of pre-play face-to-face encounter on cooperative behavior. Our findings are: The degree of expected and actual cooperation within the Palestinian subject pool is significantly higher as compared to the respective levels found in Israel. In line with previous findings, cooperation decreases if subjects are paired with subjects from the other subject pool. Previously detected subject pool differences are not offset. The drop in inter-subject pool cooperation can be outweighed by the introducing of face-to-face communication, which dramatically increases the cooperation rates. The differences in contributions between Palestinians and Israelis are associated with differences in subjects' beliefs. Face-to-face encounter increases and balances beliefs and therefore enhances cooperation.