Coordination via Redistribution

47 Pages Posted: 27 Nov 2017

See all articles by Andrea FM Martinangeli

Andrea FM Martinangeli

Burgundy School of Business; University of Gothenburg - Centre for Collective Action (CeCAR)

Peter Martinsson

University of Gothenburg - Department of Economics and Statistics

Amrish Patel

University of East Anglia (UEA) - School of Economics

Date Written: November 23, 2017

Abstract

Can prior voluntary redistribution improve coordination? We theoretically show that distributive preferences, forward induction and signalling all imply that it can. We then experimentally test our predictions by allowing subjects to redistribute part of their endowment before playing a battle of the sexes game. To identify whether the redistribution option increases coordination, and why, we also run experiments with no redistribution and forced redistribution. Our results show that the redistribution option does indeed significantly increase coordination. Disentangling the reasons why, we find that behaviour is most consistent with distributive preferences and one-step of forward induction (rather than signalling or two-steps of forward induction).

Keywords: Coordination, redistribution, experiment, distributive preferences, forward induction, signalling altruism

JEL Classification: C72, D02

Suggested Citation

Martinangeli, Andrea and Martinsson, Peter and Patel, Amrish, Coordination via Redistribution (November 23, 2017). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2017-7, Available at SSRN: https://ssrn.com/abstract=3076310 or http://dx.doi.org/10.2139/ssrn.3076310

Andrea Martinangeli (Contact Author)

Burgundy School of Business ( email )

29 Rue Sambin
Dijon, 21000
France

University of Gothenburg - Centre for Collective Action (CeCAR) ( email )

Box 100, S-405 30
Gothenburg
Sweden

Peter Martinsson

University of Gothenburg - Department of Economics and Statistics ( email )

Box 640
Vasagatan 1, E-building, floor 5 & 6
Göteborg, 40530
Sweden

Amrish Patel

University of East Anglia (UEA) - School of Economics ( email )

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