Inequality, trust and growth

An experimental study

A. Sadrieh, H.A.A. Verbon

Research output: Working paperDiscussion paperOther research output

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Abstract

In a three player dynamic public goods experiment, social output today determines production possibilities tomorrow.In each period, players choose to sabotage, to co-operate, or to play best response.Sabotage harms social output and growth.Mutual co-operation maximises both.The property rights to social output are distributed unequally.Extent and skew of inequality are varied. Empirical studies indicate a negative impact of inequality on trust and growth. We observe equilibrium play in most cases.There is also substantial co-operation, but little sabotage.Our exogenous variations of inequality are neutral to growth, neither negatively correlated to co-operation, nor positively correlated to sabotage.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages25
Volume2002-84
Publication statusPublished - 2002

Publication series

NameCentER Discussion Paper
Volume2002-84

Fingerprint

Sabotage
Experimental study
Empirical study
Best response
Property rights

Keywords

  • public goods
  • game theory

Cite this

Sadrieh, A., & Verbon, H. A. A. (2002). Inequality, trust and growth: An experimental study. (CentER Discussion Paper; Vol. 2002-84). Tilburg: Macroeconomics.
Sadrieh, A. ; Verbon, H.A.A. / Inequality, trust and growth : An experimental study. Tilburg : Macroeconomics, 2002. (CentER Discussion Paper).
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Sadrieh, A & Verbon, HAA 2002 'Inequality, trust and growth: An experimental study' CentER Discussion Paper, vol. 2002-84, Macroeconomics, Tilburg.

Inequality, trust and growth : An experimental study. / Sadrieh, A.; Verbon, H.A.A.

Tilburg : Macroeconomics, 2002. (CentER Discussion Paper; Vol. 2002-84).

Research output: Working paperDiscussion paperOther research output

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N2 - In a three player dynamic public goods experiment, social output today determines production possibilities tomorrow.In each period, players choose to sabotage, to co-operate, or to play best response.Sabotage harms social output and growth.Mutual co-operation maximises both.The property rights to social output are distributed unequally.Extent and skew of inequality are varied. Empirical studies indicate a negative impact of inequality on trust and growth. We observe equilibrium play in most cases.There is also substantial co-operation, but little sabotage.Our exogenous variations of inequality are neutral to growth, neither negatively correlated to co-operation, nor positively correlated to sabotage.

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KW - public goods

KW - game theory

M3 - Discussion paper

VL - 2002-84

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Sadrieh A, Verbon HAA. Inequality, trust and growth: An experimental study. Tilburg: Macroeconomics. 2002. (CentER Discussion Paper).