Scandinavian Working Papers in Economics
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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 2017:3:
Risk and Cooperation: Experimental Evidence from Stochastic Public Good Games

Stepan Vesely () and Erik Wengström ()

Abstract: Outcomes in social dilemmas often have a stochastic component. We report experimental findings from public good games with both correlated and independent risk across players. We find that the presence of both types of risk prevents the decay of cooperation typically observed in the standard deterministic public good game. The results further suggest that it is greater relative importance of social norms or warm glow giving, rather than risk sharing opportunities that foster cooperation in our stochastic public good game.

Keywords: risk pooling; risk sharing; social norms; linear public goods game; cooperation decay; stable cooperation; (follow links to similar papers)

JEL-Codes: D03; D80; H41; (follow links to similar papers)

32 pages, March 2, 2017

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