Evolution of cooperation in the indefinitely repeated collective action with a contest for power

Abstract

Social and political inequality among individuals is a common driving force behind the breakdown in cooperation. In this paper, we theoretically and experimentally study cooperation among individuals faced with a sequence of collective-action problems in which the benefits to cooperation are divided according to political power that is obtained through a contest. We have three main results. First, we find that cooperation predictably responds to the fundamental parameters of the collective-action problem. Specifically, it is increasing in the benefit to cooperation and how much benefit is gained from partial group cooperation, and decreasing in the number of players. Second, we find that when players are unrestricted in their expenditures in the contest, cooperation is much lower than when expenditures are set to a specific proportion of earnings. Finally, we find that individual norms and beliefs account for a substantial proportion of explained variance in individuals' decisions to cooperate.

Keywords: Cooperation, Contest, Dynamic Coordination Games, Indefinitely Repeated Games, Experimental Design, Beliefs, Individual and Social Norms

JEL Classification: C73, C92, D91