Do What (You Think) the Rich Will Do: Inequality and Belief Heterogeneity in Public Good Provision

Abstract

Beliefs about others' cooperativeness are among the strongest determinants of cooperative behaviours. Beliefs about different others, however, are not necessarily uniform, nor necessarily related to past behaviours: different expectations about different others might solely originate from differences in observed individual characteristics. Finally, not all such beliefs need drive conditional behaviour alike. In an experimental public good game with heterogeneous endowments, I find that rich subjects are expected to cooperate more by both rich and poor individuals, and that behaviours of both the rich and poor significantly correlate only with beliefs about the rich. I further find that an intervention aimed at downplaying the salience of heterogeneity has no impact on neither beliefs nor cooperation. I conclude with implications for information dissemination about uncooperative behaviour in the mass media and avenues for further research.

Keywords: belief formation, cooperation, experiment, group identity, inequality, public goods

JEL Classification: C91, H41