To What Extent Do Latin Americans Trust, Reciprocate, and Cooperate?: Evidence from Experiments in Six Latin American Countries
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To What Extent Do Latin Americans Trust, Reciprocate, and Cooperate?
Evidence from Experiments in Six Latin American Countries

In this paper we study the microfoundations and mechanisms that may affect trust, reciprocity, and cooperation for different social groups. We use a field approach, based on surveys and experimental methods, conducted simultaneously in six Latin American cities. This approach focuses on the behavioral aspects of the collective action problem, enriched by the social and economic contexts in which microeconomic interactions take place, and involves the direct observation of individuals. The experimental design of this project captures some of the key dimensions of the problem of collective action, making it possible to extract lessons about group-oriented behavior in Latin America.

The puzzle of cooperation among humans remains a central and relevant question. In 2005 the magazine Science listed the evolution of cooperative behavior as one of the top twenty-five most relevant scientific puzzles to be solved in the next quarter century.1 Regardless of place, time, or income group, cooperation and collective action have constituted a major part of humans’ daily life. From the organization of hunters and gatherers to global [End Page 45] warming and traffic, the tragedy of the commons and the dilemma of cooperation continue to affect societies’ well-being. Humans have devised multiple forms of correcting losses from problems of collective action by harnessing the conflict between individual and social outcomes through incentives, in the form of norms and laws. A significant number of social interactions involve potential losses of efficiency stemming from externalities or problems with the provision of public goods. As a result, one inevitable outcome is that some individuals free ride on others. The lack of trust exacerbates free riding, thus reducing opportunities to produce socially efficient outcomes.

Free riding and lack of coordination are problems that communities face in their daily lives. Households contribute labor to starting or maintaining local projects that benefit their neighborhood, and neighborhoods contribute to local funds to pay for security or playground maintenance. Child care, recreation parks, water provision, and street cleaning are all examples of projects in which groups ensure access to a public good through private provision. Groups also organize to face other kinds of problems different from collective action. That is the case of facing risk through risk pooling, joining efforts, or pooling payoffs under uncertainty. Risks involve credit, natural disasters, political violence, and crime, among others. In such cases, the formation of groups to face risk involves a collective action problem in itself, and the outcome can spread the payoffs throughout the group.

Cooperating or forming groups to produce an outcome that is beneficial to the group is usually costly. Sometimes it involves a coordination game in which each individual would benefit more if everyone else behaves accordingly, and the payoffs drive individuals toward the best outcome without conflicts between individual and group interests. Other times it is a collective action game in which the individual strategy would be not to cooperate, although everyone in the group would benefit if everyone cooperated. In either case the group needs to find the conditions under which individuals can make these costly decisions in ways that yield benefits from group-oriented activity. These conditions include several behavioral aspects of the problem. For instance, individuals may make decisions based on their sense of group affiliation, social distance, or sympathy toward others in the group. Their personal evaluation of the benefits and costs of forming a group or cooperating in a collective action dilemma may be mediated by their expectations of what they believe the others will do and by their valuation of the distributional and efficiency consequences of their actions.

Solving the prisoner’s dilemma, the tragedy of the commons, or any collective action dilemma requires individuals to trust their interacting partners. [End Page 46] Trusting others under incomplete contracts, however, involves the possibility that the trusting action will yield no benefits from the trustees, creating net losses for the trusting person. If the trustees reciprocate, the group increases the net social welfare. If the game is repeated, players can engage in a virtuous cycle of trust...