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The trade-off between welfare and equality in a public good experiment

  • Agathe Rouaix
  • Charles Figuières
  • Marc Willinger

We report the results of an experiment on voluntary contributions to a public good in which we implement a redistribution of the group endowment among group members in a lump sum manner. We study the impact of redistribution on group contribution, on individuals’ contribu- tions according to their endowment and on welfare. Our experimental results show that welfare increases when equality is broken, as predicted by theory (Itaya, De Meza & Myles, 1997), because the larger contribution of the rich subjects overcompensates the lower contribution of the poor subjects. Last but not least, agents’ behavior in situations of inequality of income, depends on initial conditions. In particular, the decisions of those who become poor seem to express a form of protest against the new distribution of incomes compared to those who started out as poor: from a behavioral point of view, being poor is therefore not equivalent to becoming poor.

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File URL: http://www.lameta.univ-montp1.fr/Documents/DR2013-03.pdf
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Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 13-03.

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Length: 26 pages
Date of creation: Feb 2013
Date of revision: Feb 2013
Handle: RePEc:lam:wpaper:13-03
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