The Impact of Simple Institutions in Experimental Economies with Poverty Traps

Bibliographic Data

ID9716016
AuthorsC Monica Capra (0000-0002-6231-5636, Emory University), Tomomi Tanaka (0000-0002-1455-7710, Tilburg University), Colin F Camerer (0000-0003-4049-1871, California Institute of Technology), Lauren Feiler (Arizona State University), Lauren Munyan, Veronica Sovero (0000-0002-0881-4741, Carleton College), Lisa Wang (0000-0001-9726-0383), Charles N Noussair (University of California, Los Angeles), Charles Noussair (0000-0001-5348-4414)
Year2009
Volume119
Issue539
Pages977-1009
Publication date2009-07-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2009.02262.x
OpenAlexW3125183375
LanguageEN
Citations received2
References cited37

We introduce an experimental approach to study the effect of institutions on economic growth. In \neach period, agents produce and trade output in a market, and allocate it to consumption and \ninvestment. Productivity is higher if total capital stock is above a threshold. The threshold externality \ngenerates two steady states – a suboptimal poverty trap and an optimal steady state. In a baseline \ntreatment, the economies converge to the poverty trap. However, the ability to make public \nannouncements or to vote on competing and binding policies, increases output, welfare and capital \nstock. Combining these two simple institutions guarantees that the economies escape the poverty \ntrap

Consumption (sociology · Earnings · Economic growth · Economic system · Economics · Economy · Externality · Investment (military · Macroeconomics · Microeconomics · Politics · Poverty · Poverty trap · Productivity · Simple (philosophy · Economic Policies and Impacts · Economic theories and models · Economic Theory and Institutions

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