Smriti Sharma (Newcastle University Business School)

Inequality, corruption and cooperation: Evidence from Vietnam

Abstract: We examine the effects of randomly introduced inequality on voluntary cooperation and whether this relationship is influenced by exposure to local corruption, using data from a large-scale lab-in-the-field public goods experiment with over 1,300 participants across rural Vietnam. Our results show that inequality adversely affects aggregate contributions. Within groups with heterogeneous endowments, individuals with high endowments contribute a significantly smaller share than those with low endowments. The effect of inequality on cooperation is further exacerbated by corruption. We find that beliefs about others' contributions are lower in heterogeneous groups in the presence of corruption, and this is an important mechanism explaining our results.