Cooperation is Unaffected by the Threat of Severe Adverse Events in Public Goods Games

In the context of a one-shot public goods game with a large group size and a low marginal per capita return, we study if and how cooperation is affected by the presence of environmental risk – defined as an exogenous stochastic process that generates a severe adverse event with a very small probability – and by the correlation of such risk among the group members. More specifically, we run an online experiment to investigate the effect of a risk that is independent across group members, a risk that is positively correlated among group members, and a risk that is negatively correlated among group members on cooperation. We find that neither the presence nor the correlation of risk significantly affects individual contributions.