Inequality, trust and growth: An experimental study

A. Sadrieh, H.A.A. Verbon

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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

Keywords

  • public goods
  • game theory

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