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Do Economic Inequalities Affect Long-Run Cooperation & Prosperity?

Author

Listed:
  • Gabriele Camera

    () (Economic Science Institute, Chapman University & University of Bologna)

  • Cary Deck

    (University of Alabama & Chapman University)

  • David Porter

    (Economic Science Institute, Chapman University)

Abstract

We explore if fairness and inequality motivations affect cooperation in indefinitely repeated games. Each round, we randomly divided experimental participants into donor-recipient pairs. Donors could make a gift to recipients, and ex-ante earnings are highest when all donors give. Roles were randomly reassigned every period, which induced inequality in ex-post earnings. Theoretically, income-maximizing players do not have to condition on this inequality because it is payoff-irrelevant. Empirically, payoff-irrelevant inequality affected participants’ ability to coordinate on efficient play: donors conditioned gifts on their own past roles and, with inequalities made visible, discriminated against those who were better off.

Suggested Citation

  • Gabriele Camera & Cary Deck & David Porter, 2019. "Do Economic Inequalities Affect Long-Run Cooperation & Prosperity?," Working Papers 19-09, Chapman University, Economic Science Institute.
  • Handle: RePEc:chu:wpaper:19-09
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/267
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    cooperation; experiments; 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
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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