The Italian North-South Divide: An Anatomy of the Cooperation Gap

2 PM

Venue: DISA Seminar room, Department of Economics and Management

Speaker: Stefania Bortolotti, University of Cologne

Abstract

We present an experimental study on the determinants of the resilient cooperation divide between Northern and Southern Italian regions documented in Bigoni et al., (2015). We test two behavioral mechanisms that can account for the previous results: (i) conditional cooperation --and expectations thereof; and (ii) betrayal aversion. The two interpretations lead to distinct behavioral predictions when moving from in-group to out-group cooperation. We exploited the fact that University of Bologna attracts students from all Italian regions and this heterogeneity is reflected in our subject-pool. Our findings suggest that Southerners are not less cooperative per-se, but they rather hold more pessimistic expectations about their fellow citizens. While we acknowledge that variations in external factors and incentives may contribute to the existing North-South divide in Italy, we maintain that successful policies should also foster positive expectations. In addition, we find some evidence supporting the idea that Southerners are more betrayal averse than Northerners. Finally, we report a strong and significant impatience gap, with Southerners less willing to forgo immediate payments in favour of delayed rewards.