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Asymmetric Use of Punishment in Socioeconomic Segregated Societies Leads to an Unequal Distribution of Wealth

Investigating hierarchical class segregation and the use of punishment applied downward in a hierarchy acts as a key aspect to ascertain how dominant and subordinate partners cooperate to achieve mutual profit. In countries with an uneven wealth distribution, this mutual profit may be reduced, especially for the lower socioeconomic classes. In this experiment, we implemented an Iterated Prisoner’s Dilemma Game in one such country with a starkly high Gini index, China. We split relatively richer and poorer subjects into separate classes and gave only one the authority to punish the other. When rich subjects could unidirectionally punish poor subjects (as in a segregated society), rich subjects decreased their cooperation effort while punishing poor subjects. When rich and poor subjects, instead, could punish each other in random combinations (as in an integrated society) they de- creased defections so they could punish more. In the segregated society model, the punishing classes earned twice as much as the non-punishers. Conversely, in the integrated society model, weak differences in earnings were found, leading to a decrease in inequality. An Agent Based simulation confirmed these results when the interacting agents became thousands rather than the over three hundred human participants. From our research, we conclude that, especially in developing economies, stimulating the wealthier and poorer individuals towards a socioeconomic integration of their cooperative exchanges may ultimately lead to a redistribution of wealth.