Integrating economic mobility into the Public Goods Game: the effect on cooperation

Experimental economists study the Public Goods Game (PGG) to investigate cooperative behavior. This study embedded inequality and income mobility into the PGG to investigate its effect on cooperation. Treatment 1 embedded fixed transfers in-between rounds of the PGG, representing equally distributed income growth. Treatments 2 and 3 embedded variable transfers in-between rounds, representing heterogeneously distributed income growth based on equal proportion of luck and effort (Treatment 2) or a disproportionate amount of luck (Treatment 3). Treatments 2 and 3 also enabled relative income mobility, while treatment 1 restricted any possibility of relative mobility. Results showed that introducing relative income mobility (Treatments 2 and 3) did not lead to greater cooperation (when compared with Treatment 1) among the players. Comparing Treatments 2 and 3, participants contributed more to the PGG when relative income mobility was dependent on effort rather than on luck. Despite theories linking weakened meritocratic beliefs with greater preferences for redistribution, in this study, contribution to the PGG fell when the income mobility process was predominantly luck-based. Unfairness observed in the income mobility process discouraged contribution, even when equity of final outcomes could be achieved through cooperation. This could be because a behavioral component of dissatisfaction against inequity in the income mobility process outweighed the motive of using the PGG to redistribute unfair income. The study also investigated within-treatment behavior of different endowment types (low class, middle class, high class) when various forms of income mobility were integrated. Under these conditions, and when relative income mobility was integrated into the PGG on a predominantly luck-based process, a significant reduction in contribution from the middle class was observed. Endowment inequality did not reduce cooperation, presumably because the associated relative income mobility incorporation into the PGG threatened downward mobility, such that higher-class participants contributed to establish a safety-net.