Cooperation in a risky world

 

We offer a novel investigation of the effect of environmental risk on cooperation in the Voluntary Contribution Mechanism. Our baseline is the standard setting in which the personal return from the cooperation is deterministic, homogeneous, and publicly known. Our experimental treatments alter this classic design by making the marginal per capita return from the cooperation probabilistic. In the homogeneous risk treatment (HomR), the random draw is made for the whole group, while in the heterogeneous risk treatment (HetR) this happens independently for each group member. Our hypothesis is that different environmental risks may differently affect the ex post payoff inequalities, so that other-regarding preferences (inequality aversion) may generate higher contributions in HomR than in HetR. Our main result is that the environmental risk does not affect the patterns of cooperation either in the one-shot or in the finitely repeated version of the game. This suggests that the standard experimental methodology provides a robust and conservative measure of human cooperation.