Cooperation under the shadow of inequality

Abstract

Cooperation often entails an unequal distribution of benefits. We study how inequality concerns affect the willingness to cooperate with others in an indefinitely repeated prisoner's dilemma. The experimental treatments vary the equality of payoffs resulting from mutual cooperation, the expected duration of an interaction, and whether the inequality remains constant throughout an interaction. At the aggregate level, we find that cooperation rates across treatments are accurately predicted by a model that assumes players solely care about their pecuniary payoffs. At the individual level, we find evidence that individuals care about treating others fairly, but not about inequality per se.