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Do economic inequalities affect long-run cooperation and prosperity?

Published online by Cambridge University Press:  14 March 2025

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

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.

Type
Original Paper
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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