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Panic in the lab: the effect of extreme external risks and bolstering cooperation in public goods games

  • Rare but extreme events, such as pandemics, terror attacks, and stock market collapses, pose a risk that could undermine cooperation in societies and groups. We extend the public goods game (PGG) to investigate the relationship between rare but extreme external risks and cooperation in a laboratory experiment. By incorporating risk as an external random variable in the PGG, independent of the participants’ contributions, we preserve the economic equilibrium of non-cooperation in the original game. Furthermore, we examine whether cooperation can be restored by the relatively simple intervention of informing about countermeasures while keeping the actual risk constant. Our experimental results reveal that on average extreme risks indeed decrease contributions by about 20%; however, countermeasure information increases contributions by about 10%. Specifically, in the first interactions, cooperation levels can even reach those observed in the riskless baseline. Our results suggest that countermeasure information could help reinforce social cohesion and resilience in the face of rare but extreme risks.

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Author of HS ReutlingenSchweitzer, Sascha
Place of publication:Rochester, NY
Document Type:Working Paper
Publication year:2024
Tag:cooperation in public goods games; countermeasure information; extreme external risks; laboratory experiment; societal resilience
Page Number:21
First Page:1
Last Page:21
DDC classes:330 Wirtschaft
Open access?:Ja
Licence (German):License Logo  Open Access