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The Impact of Inequality on Cooperation: An Experimental Study

Author

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  • Annarita COLASANTE

    (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)

  • Alberto RUSSO

    (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)

Abstract

This paper analyzes the impact of inequality in the distribution of endowments on contributions. We conduct a lab experiment using the well-known Public Good Game to test the relation between inequality and contribution to a public fund. We introduce the possibility to choose among three different redistribution rules: equidistribution, proportional to contribution and progressive to endowment. This novelty, combined with a payoff function that depends also on previous period behavior, allows us to verify the hypothesis that players show inequity averse preferences. Results show that inequality has a negative impact on individual contribution. Since inequality is decreasing during repetitions, we deduce that players show inequity averse preferences.

Suggested Citation

  • Annarita COLASANTE & Alberto RUSSO, 2014. "The Impact of Inequality on Cooperation: An Experimental Study," Working Papers 401, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:401
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    More about this item

    Keywords

    Inequality; Public Good Game; Reciprocity;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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