Us and Them: Experimental evidence on what creates efficiency in choices made by married couples

A recurring and puzzling pattern with experiments on intra-household behaviour is the common failure of couples to attain the cooperative solution. Using married couples from a low income area of Bogota, Colombia we conduct an experiment that raises the salience of the family vis-à-vis outsiders. In this experiment husbands and wives play a repeated voluntary contribution game. At the same time each participant plays an identical game with one stranger in the same session. When investments to the common pools are made from separate and non-fungible budgets, most subjects contribute more to the household pool than the stranger pool, but rarely contribute everything to the household even after repetition and opportunities for learning. Efficiency is not obtained. However, when subjects make contributions to the two games from a single budget many individuals converge rapidly on a strategy of investing everything in the household pool and contributing little to the pool with a stranger. Overall the amount invested in some pool rises. Our results are in line with games played with individuals in which in-group cooperation is higher when membership of the group is more salient. They suggest that strengthening family identity may raise intrahousehold cooperation, but at the expense of cooperation of interhousehold cooperation.