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Do economic inequalities affect long-run cooperation and prosperity?

Published online by Cambridge University Press:  14 March 2025

Gabriele Camera Open the ORCID record for Gabriele Camera [Opens in a new window] ,
Cary Deck  and
David Porter
Gabriele Camera*
Affiliation:
Economic Science Institute, Chapman University, One University Dr., 92866 Orange, CA, USA University of Bologna, Bologna, Italy
Cary Deck
Affiliation:
Economic Science Institute, Chapman University, One University Dr., 92866 Orange, CA, USA University of Alabama, Tuscaloosa, USA
David Porter
Affiliation:
Economic Science Institute, Chapman University, One University Dr., 92866 Orange, CA, USA
*
[email protected]
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Abstract

We explore if fairness and inequality motivations affect cooperation in indefinitely repeated games. Each round, we randomly divided experimental participants into donor–recipient pairs. Donors could make a gift to recipients, and ex-ante earnings are highest when all donors give. Roles were randomly reassigned every period, which induced inequality in ex-post earnings. Theoretically, income-maximizing players do not have to condition on this inequality because it is payoff-irrelevant. Empirically, payoff-irrelevant inequality affected participants’ ability to coordinate on efficient play: donors conditioned gifts on their own past roles and, with inequalities made visible, discriminated against those who were better off.

Keywords

CooperationExperimentsIndefinitely repeated gamesSocial dilemmas

JEL classification

E02: Institutions and the Macroeconomy C90: General C70: General
Type
Original Paper
Information
Experimental Economics , Volume 23 , Issue 1 , March 2020 , pp. 53 - 83
Copyright
Copyright © 2019 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-019-09610-5) contains supplementary material, which is available to authorized users.

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