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Growth and inequality in public good provision

Gaechter, Simon; Mengel, Friederike; Tsakas, Elias; Vostroknutov, Alexander

Authors

SIMON GAECHTER simon.gaechter@nottingham.ac.uk
Professor, Psychology of Economic Decision Making

Friederike Mengel

Elias Tsakas

Alexander Vostroknutov



Abstract

In a novel experimental design we study public good games with dynamic interdependencies, where each agent’s wealth at the end of period t serves as her endowment in t + 1. In this setting growth and inequality arise endogenously allowing us to address new questions regarding their interplay and effect on cooperation. We find that amounts contributed are increasing over time even in the absence of punishment possibilities. Variation in wealth is substantial with the richest groups earning more than ten times what the poorest groups earn. Introducing the possibility of punishment does not increase wealth and in some cases even decreases it. In the presence of a punishment option inequality in early periods is strongly negatively correlated with group income in later periods, highlighting negative interaction effects between endogenous inequality and punishment.

Journal Article Type Article
Publication Date Jun 1, 2017
Journal Journal of Public Economics
Print ISSN 0047-2727
Electronic ISSN 0047-2727
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 150
APA6 Citation Gaechter, S., Mengel, F., Tsakas, E., & Vostroknutov, A. (2017). Growth and inequality in public good provision. Journal of Public Economics, 150, https://doi.org/10.1016/j.jpubeco.2017.03.002
DOI https://doi.org/10.1016/j.jpubeco.2017.03.002
Publisher URL https://www.sciencedirect.com/science/article/pii/S0047272717300361
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by/4.0





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