Intergroup cooperation in the lab: asymmetric power relations and redistributive policies

• Published in: Empirica Vol. 51; no. 4; pp. 877 - 912
• Main Authors: Mitterbacher, Kerstin, Palan, Stefan, Fleiß, Jürgen
• Format: Journal Article
• Language: English
• Published: New York Springer US 01-11-2024; Springer Nature B.V
• Subjects: Asymmetry; Cooperation; Econometrics; Economics; Economics and Finance; Egalitarianism; European Integration; Expenditures; Experiments; Favoritism; Group identity; Industrial Organization; Intergroup relations; International Economics; Macroeconomics/Monetary Economics//Financial Economics; Original Paper; Pareto optimum; Policy making; Power; Production; Public Finance; Reciprocity; Resource allocation; Students; Asymmetric power relations; Intergroup game; Jointly created goods; C91; Laboratory experiment; Redistributive policies; C72
• ISSN: 0340-8744; 1573-6911
• DOI: 10.1007/s10663-024-09623-1

We study intra- and intergroup cooperation in the production and distribution of a jointly created good. Over several periods, members of one group can choose whether or not to contribute to the good’s production. Members of the other group vote to implement a fair or a discriminatory sharing policy for the good’s proceeds. More cooperative behavior by members of an outgroup renders ingroup members more willing to cooperate in turn. Our experiment documents reciprocity in intergroup cooperation settings. This reciprocity at times leads to mutually beneficial cooperation but when one group defects, it may also lead to cooperation breaking down. Understanding how one group’s cooperation influences another group’s decisions can improve resource allocation as well as influence policy-makers’ decisions towards fairer distribution strategies.