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Inequality as a barrier to economic integration? An experiment

Published online by Cambridge University Press:  14 March 2025

Gabriele Camera Open the ORCID record for Gabriele Camera [Opens in a new window] ,
Lukas Hohl  and
Rolf Weder
Gabriele Camera*
Affiliation:
Economic Science Institute, Chapman University, One University Dr., Orange, CA 92866, USA
Lukas Hohl*
Affiliation:
Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, 4002 Basel, Switzerland
Rolf Weder*
Affiliation:
Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, 4002 Basel, Switzerland
*
camera@chapman.edu
lukas.hohl@unibas.ch
rolf.weder@unibas.ch
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Abstract

International economic theory suggests that people should embrace economic integration because it promises large gains. But policy reversals such as Brexit indicate a desire for economic disintegration. Here we report results of an experiment of how size and cross-country distribution of gains from integration influence individuals’ inclination to cooperate to reap its intended benefits and to embrace or reject integration. The design considers an indefinitely repeated helping game with multiple equilibria and strategic uncertainty. The data reveal that inequality of potential gains neither affected behavior nor reduced support for economic integration. However, integration may lead to disappointing, unequally distributed welfare gains, undermining support for the policy. This suggests that to better assess integration policies, we should account for the spillover effects of integration on behavior. Miscalculating this behavioral aspect may undermine the intended development goals and motivate calls for dramatic policy-reversals.

Keywords

Economic opportunityEndogenous institutionsGlobalizationIndefinitely repeated gamesSocial dilemmas

JEL classification

F02: International Economic Order and Integration C90: General C70: General
Type
Original Paper
Information
Experimental Economics , Volume 26 , Issue 2 , April 2023 , pp. 383 - 411
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2022.

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Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-022-09777-4.

The authors thank Editors L. Gangadharan and J. Duffy, two anonymous reviewers for many helpful comments, N. Schmitt, the ESI lab manager and seminar participants at: CSU Fullerton, Universities of Basel, Hamburg, Miami, USC, UC Santa Barbara, Canadian Economics Association 2019 meetings, World Bank ABCDE 2019 conference, 2019 GSE Summer Forum (Pompeu Fabra), 2019 SSES Conference (Geneva), 2018 and 2019 ESA meetings (Berlin, Los Angeles). The replication material for the study is available at https://doi.org/10.7910/DVN/FNRYHO. The authors acknowledge partial research support through the SNSF Grant No. 100018.172901.

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