Growth and Inequality in Public Good Games

Simon Gaechter, Friederike Mengel, Elias Tsakas, Alexander Vostroknutov
2013 Social Science Research Network  
In a novel experimental design we study public good games with dynamic interdependencies. More precisely, each agent's income at the end of a period serves as her endowment in the following period. In this setting growth and inequality arise endogenously allowing us to address new questions regarding their interplay and effect on cooperation levels. We find that, in stark contrast to standard public good experiments, contributions are increasing over time even in the absence of punishment
more » ... ilities. In both treatments (with and w/o punishment) inequality and group income are positively correlated for poor groups (with below median income), but negatively correlated for rich groups (with above median income). There is very strong path dependence: inequality in early periods is strongly negatively correlated with group income in later periods. These results give new insights into why people cooperate and should make us rethink previous results from the literature on repeated public good games regarding the decay of cooperation in the absence of punishment.
doi:10.2139/ssrn.2351717 fatcat:2pjpurtiirej7ki6nm2lgijrg4