A Tale of Two Cities: An Experiment on Inequality and Preferences

54 Pages Posted: 17 Sep 2018

See all articles by Maria Bigoni

Maria Bigoni

University of Bologna - Department of Economics; IZA Institute of Labor Economics

Stefania Bortolotti

MPI for Research on Collective Goods

Veronica Rattini

University of Bologna - Department of Economics

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Abstract

In an online experiment, we exploit the existing disparities in socio-economic status within an Italian city, to study how these differences correlate with preferences in strategic and non-strategic situations. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart's trustworthiness than those living in a lower socio-economic environment. By contrast, no significant differences emerge in other preferences: generosity, risk-attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.

Keywords: beliefs, discrimination, generosity, risk attitudes, time preferences, trust, trustworthiness

JEL Classification: C90, D31, D63, R23

Suggested Citation

Bigoni, Maria and Bortolotti, Stefania and Rattini, Veronica, A Tale of Two Cities: An Experiment on Inequality and Preferences. IZA Discussion Paper No. 11758. Available at SSRN: https://ssrn.com/abstract=3249872

Maria Bigoni (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, Bologna 40126
Italy
+390512098134 (Phone)

HOME PAGE: http://https://www.unibo.it/sitoweb/maria.bigoni/en

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Stefania Bortolotti

MPI for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Veronica Rattini

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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