CeDEx workshop - Felix Kölle (University of Cologne)

Cooperation in Privileged Groups

Abstract: In this article, we experimentally investigate the effects of group member heterogeneity on the provision of public goods with and without punishment opportunities. More specifically, we are looking at two different types of privileged groups, i.e. groups in which at least one member has an individual incentive to supply a positive amount of the public good. We find that the amount of voluntary contributions and the effectiveness of punishment crucially depends on the type of privileged group considered. While, compared to normal groups, asymmetric valuations of the public good have a negative effect on contribution behavior, asymmetric abilities in providing the public good have a positive and stabilizing effect on voluntary contributions. These effects are not driven by differences in punishment behavior between treatments. Hence, whether privileged groups are as privileged as they initially seem is subject to the nature of their asymmetry.

Keywords: Public goods, privileged groups, heterogeneity, punishment, voluntary provision, cooperation, inequality

JEL Classification: H41, D63, C92