Inequality Aversion and Asymmetric Cooperation in N-Player Public Good Games

Abstract

Conditional cooperation is an important factor in voluntary cooperation. Fehr and Schmidt (1999) show that in public good games conditional cooperation among rational players is feasible if cooperators are sufficiently inequality averse and if there are not too many free riders. The derived equilibria are characterized by cooperators who all choose the same above minimum contribution level (symmetric cooperation). We generalize this result by showing, first, that there exist equilibria in which cooperators choose different above minimum contribution levels and, second, that there exist equilibria with three or more different contribution levels. We refer to these as equilibria with "asymmetric cooperation" in contrast to the symmetric equilibria in which all cooperators choose the same contribution level.

Keywords: Microeconomics, Behavioral Economics, Social Preferences, Inequality Aversion, Public Goods, Asymmetric Cooperation

JEL Classification: D03, D63, D64, H41