Cooperation under risk and ambiguity

Björk, Lisa; Kocher, Martin G.ORCID:; Martinsson, Peter and Nam Khanh, Pham (2016) Cooperation under risk and ambiguity. University of Gothenburg, School of Business, Economics and Law, Working Papers in Economics 683, 54 p.

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The return from investments in public goods is almost always uncertain, in contrast to the most common setup in the existing empirical literature. We study the impact of natural uncertainty on cooperation in a social dilemma by conducting a public goods experiment in the laboratory in which the marginal return to contributions is either deterministic, risky (known probabilities) or ambiguous (unknown probabilities). Our design allows us to make inferences on differences in cooperative attitudes, beliefs, and one-shot as well as repeated contributions to the public good under the three regimes. Interestingly, we do not find that natural uncertainty has a significant impact on the inclination to cooperate, neither on the beliefs of others nor on actual contribution decisions. Our results support the generalizability of previous experimental results based on deterministic settings. From a behavioural point of view, it appears that strategic uncertainty overshadows natural uncertainty in social dilemmas.

Item Type: Discussion/ Working Paper (Unspecified)
Additional Information (public): ISSN 1403-2473 (print) ISSN 1403-2465 (online)
Keywords: Public good; conditional cooperation; experiment; uncertainty; risk; ambiguity;
Classification Codes (e.g. JEL): JEL: C91, D64, D81, H41
Research Units: Former Research Units (until 2020) > Insight Austria
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Date Deposited: 01 Dec 2017 12:17
Last Modified: 21 Nov 2018 12:45

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