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Absolute vs. relative poverty and wealth: Cooperation in the presence of between-group inequality

Author

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  • Eugenio Levi

    (Department of Public Economics, Masaryk University, Brno, 602 00, Czech Republic, Faculty of Economics and Management, Free University of Bozen-Bolzano, Bozen-Bolzano, 39100, Italy)

  • Abhijit Ramalingam

    (Department of Economics, Walker College of Business, Appalachian State University, Boone, NC 28608, United States)

Abstract

While inequality in resource endowments has been shown to affect cooperation levels in groups, much of this evidence comes from studies of within-group inequality. In an online public goods experiment, we instead examine the effects of payoff-irrelevant inequality in resources between groups on cooperation within equal groups. When all groups are poor or rich, their contribution behaviour is very similar. Relative inequality, when poor and rich groups coexist, leads to lower contributions in rich groups. Our results suggest that this is related to a combination of within- and between-group inequality aversion and to stereotypes about the rich contributing less than the poor.

Suggested Citation

  • Eugenio Levi & Abhijit Ramalingam, 2023. "Absolute vs. relative poverty and wealth: Cooperation in the presence of between-group inequality," MUNI ECON Working Papers 2023-09, Masaryk University.
    • Handle: RePEc:mub:wpaper:2023-09
    DOI: 10.5817/WP_MUNI_ECON_2023-09
    Note: License: CC BY-NC-ND 4.0
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    More about this item

    Keywords

    between-group; resource inequality; cooperation; public goods; online experiment; beliefs;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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