C. Snijders et W. Raub, REVOLUTION AND RISK - PARADOXICAL CONSEQUENCES OF RISK-AVERSION IN INTERDEPENDENT SITUATIONS, Rationality and society, 10(4), 1998, pp. 405-425
We analyze the effects of risk preferences on cooperative behavior in
a repeated Prisoner's Dilemma. We show that, counterintuitively, risk
aversion favors cooperative behavior. Hence, if people are risk averse
for gains and risk seeking for losses, conditions for cooperation are
less restrictive when outcomes represent gains than if outcomes repre
sent losses. In an experimental test of this prediction, we find that
risk aversion indeed favors cooperation. After controlling for the eff
ect of risk preferences, we do not find any empirical evidence for a d
ifference between cooperation in social dilemmas in which outcomes rep
resent gains and dilemmas where outcomes represent losses. The relevan
ce of this result with respect to theories of collective action, in pa
rticular Coleman's account of theories of revolution, is outlined.