Propagation of Economic Inequality Through Reciprocity and Reputation

Abstract

Reciprocity and reputation are powerful tools for encouraging cooperation on a broad scale. Here, we highlight a potential side effect of these social phenomena: exacerbating economic inequality. In two novel economic games, we manipulated the amount of money with which participants were endowed and then gave them the opportunity to share resources with others. We found that people reciprocated more toward higher-wealth givers, compared with lower-wealth givers, even when those givers were equally generous. Wealthier givers also achieved better reputations than less wealthy ones and therefore received more investments in a social marketplace. These discrepancies were well described by a formal model of reinforcement learning: Individuals who weighted monetary outcomes, rather than generosity, when learning about interlocutors also most strongly helped wealthier individuals. This work demonstrates that reciprocity and reputation—although globally increasing prosociality—can widen wealth gaps and provides a precise account of how inequality grows through social processes.