The effect of heterogeneity and risk on co-operation: Experimental evidence

Abstract

Using data from a laboratory experiment, I study how co-operation is affected when the benefit from the public good is risky (uncertain) and heterogeneous amongst members of a group. I investigate whether heterogeneity in benefits affects contributions differently under certainty and uncertainty, and whether the distribution of risk within the group affects contribution behavior. I find that heterogeneity in benefits affects contributions less under uncertainty as compared to certainty and that the distribution of risk within the group has no significant effect on co-operative behavior, but these results do not hold once we control for conditional contributions.