The effect of inequality on public-good provision: Norm conflicts & asymmetric enforcement of cooperation

Abstract

We investigate the effect of norms on contribution and punishment behavior in a linear public good game in homogeneous and heterogeneous groups. Actors are unequal in endowment and interest in the public good, and in their capability to enforce norms. The research question of this study is to what extent a self-serving bias of contribution norms based on fairness concepts, such as equity and equality, affect contribution and punishment behavior. Inequality with respect to endowment and benefits from the public good seems to enhance cooperation or have no effect on cooperation, depending on the distribution of punishment effectiveness in the population. We find that the lower the cost the more likely subjects are to punish. However, a self-serving bias does not fully explain a subject’s punishment behavior. Additionally, in this study received punishment has a negative effect on future cooperation, which suggests that the mechanism of altruistic punishment to enhance cooperation might be less effective under changing conditions of heterogeneity.