Wealth inequality and overexploitation of the commons: field experiments in Colombia

This paper explores how wealth inequalities within communities can restrict the possibilities of a self-governed solution to a group externality. Through a set of economic experiments conducted in the three villages in Colombia, and the analysis of data from the actual socio-economic characteristics of the participants, and from videotapes of the experiments, I formulate and test the hypothesis that wealth distance among group members restricts trust and positive reciprocity, key for creating and sustaining collective action. Although face-to-face communication has been usually found by social psychologists and experimental economists to be a powerful device to correct this type of coordination failure, wide variations across and within groups still remain a puzzle. By accounting for characteristics of the participants, which in some cases are brought from outside of the lab (wealth, social status, prior experience), we are able to explain a significant portion of such variation.