Real Wealth and Experimental Cooperation: Evidence from Field Experiments

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Date
2000
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Abstract
"This paper is about the role of poverty and inequality on communities trying to solve local commons dilemmas. The debate remains alive since Olson's (1965) argument that the privileged in a group facing a collective action problem may facilitate the provision of the public good despite the free riding of the poorer. Olson's hypothesis, however, has been contested by some arguing that inequality can create efficiency losses due to asymmetries of information, power or wealth , among others, which reduce the capacity of groups to achieve Pareto optimal equilibria. Experimental economics can and has been used to test with college students for these contrasting arguments. We expand the evidence by conducting a series of experiments in the field where the subjects are actual local commons users. We use additional information about the participants' real characteristics and test if such factors affected their behavior in the lab in a simple Common-Pool Resources experiment with groups of 8 people. We found that factors such as actual wealth and occupation do explain the rather wide variability on the level of cooperation achieved after allowing face-to-face communication before each round, for a sample of 10 groups. We first tested these hypotheses at group level finding that wealth and heterogeneity may be negatively associated with cooperation and efficiency. Then at a micro level we test and show that the individual is more willing to cooperate through face-to-face communication if i) has a lower level of real wealth, ii) her occupation is associated with local commons dilemmas, iii) and is playing in a group where she shows lower social distance with respect to the other 7 players. The results could be relevant not only for the inequality-cooperation debate, but for the debate on the power of experimental economics to tackle these type of questions."
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IASC, common pool resources--theory, poverty--theory, collective action--theory, inequality, cooperation--theory, experimental economics--research, game theory, Olson, Mancur
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