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Cooperation under risk and ambiguity

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  • Björk, Lisa

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Kocher, Martin

    (Department of Economics, LMU Munich)

  • Martinsson, Peter

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Nam Khanh, Pham

    (School of Economics, Ho Chi Minh City University of Economics)

Abstract

The return from investments in public goods is almost always uncertain, in contrast to the most common setup in the existing empirical literature. We study the impact of natural uncertainty on cooperation in a social dilemma by conducting a public goods experiment in the laboratory in which the marginal return to contributions is either deterministic, risky (known probabilities) or ambiguous (unknown probabilities). Our design allows us to make inferences on dierences in cooperative attitudes, beliefs, and one-shot as well as repeated contributions to the public good under the three regimes. Interestingly, we do not find that natural uncertainty has a significant impact on the inclination to cooperate, neither on the beliefs of others nor on actual contribution decisions. Our results support the generalizability of previous experimental results based on deterministic settings. From a behavioural point of view, it appears that strategic uncertainty overshadows natural uncertainty in social dilemmas.

Suggested Citation

  • Björk, Lisa & Kocher, Martin & Martinsson, Peter & Nam Khanh, Pham, 2016. "Cooperation under risk and ambiguity," Working Papers in Economics 683, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0683
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    File URL: http://hdl.handle.net/2077/50814
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    References listed on IDEAS

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    6. Kocher, Martin G. & Lahno, Amrei Marie & Trautmann, Stefan T., 2015. "Ambiguity aversion is the exception," Discussion Papers in Economics 23817, University of Munich, Department of Economics.
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    Cited by:

    1. Vincent Théroude & Adam Zylbersztejn, 2017. "Cooperation in a risky world," Working Papers halshs-01443917, HAL.
    2. Jana Freundt & Andreas Lange, 2019. "On the Impact of Risky Private and Public Returns in the Private Provision of Public Goods - The Case of Social Investments," CESifo Working Paper Series 7458, CESifo Group Munich.

    More about this item

    Keywords

    Public good; conditional cooperation; experiment; uncertainty; risk; ambiguity;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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