Inequality and inter-group conflicts: experimental evidence

In this paper we experimentally investigate the relationship between inequality and conflicts, the latter taking the shape of rebellious actions. Further, our conflict experiment allows us to study whether lack of coordination or fear of retaliation may refrain individuals from rioting despite their willingness to riot. Our conflict game consists of two-stages. In a first stage, subjects play a proportional rent-seeking game to share a prize. In a second stage, players can coordinate with the other members of their group to reduce ("burn") the other group members' payoffs. Our treatments differ in the extent of inequality. Precisely, in the first series of treatments (called symmetric treatments), inequality only arises from different investment behaviors of players in the first stage. In a second series of treatments (called asymmetric treatments), inequality is strongly reinforced by attributing to some subjects (the advantaged group) a larger share of the price than other subjects (the disadvantaged group) for the same amount of effort. While the former refer to inequality of effort the latter is related to exogenous inequality of circumstances (bad luck). We ran these treatments under both partner and stranger matching protocol. Consistent with the assumption of inequality aversion, we observe that disadvantaged groups "burn" significantly more money than advantaged groups in the asymmetric treatment. However, we also observe that the relationship between inequality and conflicts is non-linear since the frequency of conflicts is significantly higher in the symmetric treatment where inequality is moderate compared to the asymmetric treatment where inequality is extreme. Resignation seems to be the main driving force behind this phenomenon. Our findings also shed light on the important role played by coordination.