| dcterms.abstract | Many workers face uncertain jobs markets and do not know if they will have a steady income next year, next month, or even tomorrow. Unemployed workers can request help from peers or the government but they might claim they need help even when they do not. How can people know whether a worker really needs help? To study this, I designed an unemployment game in which participants interact in a difficult job market, and they earn real money based on their health in the game. Participants act as workers who look for a job to pay bills and if they cannot, their health suffers. To avoid this, a worker can request help, but they can do so whether they are unemployed or not. In the first experiment, workers request help from their neighbor, but the neighbor does not know whether the worker is really employed. Participants interact with the same partner repeatedly or a new stranger each month. I find that participants were more honest, provided more help, and achieved greater economic efficiency when matched with the same partner compared to strangers. In the second experiment, workers ask for assistance from an institution. Workers pay taxes on their income to finance the public fund. Participants are assigned to a condition with an unlimited number of requests or a condition with a limited number of requests. I find that participants in the limited condition were more honest, experienced less hardship, achieved greater economic efficiency, and had less inequality in earnings. In the third experiment, dishonesty was punished with a fine or a ban. I find both penalties increased honesty compared to an unregulated public fund; however, fines resulted in more economic efficiency, less hardship, and more equality. The results inform our understanding of how individuals can create and maintain social safety nets, despite being uncertain about needs. Further, the results show how institutional rules can promote honest claims of need and effective safety nets for the unemployed. | |
