Abstract
We study how differences in socio-economic background correlate with preferences and beliefs, in a sample of college students born in a mid-sized Italian city. Our findings indicate that participants living in an area characterized by a high socio-economic environment tend to trust more and are more inclined to reciprocate higher levels of trust, as compared to those coming from less wealthy neighborhoods. This behavioral difference is, at least in part, driven by heterogeneities in beliefs: subjects from the most affluent part of the city have more optimistic expectations on their counterpart's trustworthiness than those living in a lower socio-economic environment. By contrast, no significant differences emerge in other preferences: generosity, risk-attitudes, and time preferences. Finally, we do not find any systematic evidence of out-group discrimination based on neighborhood identity.
Highlights
Inequality has been increasing steadily in industrialized societies over the last decades, and this has been recognized as one of the main societal challenges (OECD, 2011)
We find that most of the heterogeneity in trust behavior between the two areas is explained by beliefs about trustworthiness
In both the Trust and the Dictator Game, we provide participants with information on their counterpart’s area of residence
Summary
Inequality has been increasing steadily in industrialized societies over the last decades, and this has been recognized as one of the main societal challenges (OECD, 2011). To this aim, we build on the design developed by Falk and Zehnder (2013), who ran a large experiment involving a random sample of the adult residents of Zurich, and found evidence that trustors condition their behavior on the trustee’s district of residence.. We build on the design developed by Falk and Zehnder (2013), who ran a large experiment involving a random sample of the adult residents of Zurich, and found evidence that trustors condition their behavior on the trustee’s district of residence.3 In both the Trust and the Dictator Game, we provide participants with information on their counterpart’s area of residence (which may be perceived as a signal of socio-economic status).
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