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Do Economic Inequalities Affect Long-Run Cooperation?

Author

Listed:
  • Gabriele Camera

    () (Chapman University and University of Basel)

  • Cary Deck

    (University of Arkansas and Chapman University)

  • David Porter

    (Chapman University)

Abstract

Does inequality affect a group’s cohesion and ability to prosper? Participants in laboratory economies played an indefinite sequence of helping games in random, anonymous pairs. A coin flip determined donor and recipient roles in each pair. This random shock ensured equality of opportunity but not of results, because earnings depended on realized shocks. We manipulated the ability to condition choices on this uncontrollable inequality source. In all treatments, uncertain ending supports multiple Pareto-ranked equilibria, including full cooperation. Theoretically, inequalities do not alter the incentives’ structure. Empirically, inequality disclosures altered conduct, weakened norms of mutual support and reduced efficiency.

Suggested Citation

  • Gabriele Camera & Cary Deck & David Porter, 2016. "Do Economic Inequalities Affect Long-Run Cooperation?," Working Papers 16-18, Chapman University, Economic Science Institute.
  • Handle: RePEc:chu:wpaper:16-18
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    File URL: http://www.chapman.edu/research-and-institutions/economic-science-institute/_files/WorkingPapers/camera-deck-porter-2016.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    experiments; indefinitely repeated games; social norms; social dilemmas;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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