Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

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

Stepan Vesely () and Erik Wengström ()
Additional contact information
Stepan Vesely: Department of Psychology, Norwegian University of Science and Technology, Postal: Edvard Bulls veg 1, , 7491 Trondheim, , Norway
Erik Wengström: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

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

JEL-codes: D03; D80; H41

32 pages, March 2, 2017

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wp17_3_appendix.pdf PDF-file Appendix

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