Equality Concerns and the Limits of Self-Governance in Heterogeneous Populations
38 Pages Posted: 26 Sep 2015
There are 2 versions of this paper
Equality Concerns and the Limits of Self-Governance in Heterogeneous Populations
Normative Conflict and the Limits of Self-Governance in Heterogeneous Populations
Date Written: September 26, 2015
Abstract
Mechanisms to overcome social dilemmas provide incentives to maximize efficiency. However, often – such as when agents are heterogeneous – there is a trade-off between efficiency and equality. Agents’ concerns for equality in such instances can limit the ability of mechanisms to promote efficiency. We provide evidence for this from a public good experiment using a simple mechanism which allows individuals to communicate periodically with other group members and reward them for their actions. We show that, in homogeneous populations – where there is no tension between efficiency and equality – the mechanism permits group to obtain maximum efficiency. This is not the case in heterogeneous populations where individuals derive different benefits from cooperation. Although almost all heterogeneous groups agree to follow specific contribution rules with positive contributions, most of them either prioritize equality over efficiency or strike a compromise between the two. These findings suggest that equality concerns can impose limits on the ability of heterogeneous populations to reach efficient outcomes through self-governance.
Keywords: Communication, rewards, cooperation, normative conflict, heterogeneity
JEL Classification: C92, H41, D74
Suggested Citation: Suggested Citation
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