We present the first lab-in-the field experiment on the Italian North-South divide. Using a representative sample of the population, we measure whether regional disparities in ability to cooperate emerge even if differences in geography, institutions, and criminal intrusion are silenced. We report that a behavioural gap in cooperation exists: Northern and Southern citizens react differently to the same incentives. Moreover, this gap cannot be accounted for by tolerance for risk, proxies of social capital, and ’amoral familism.’ At least a share of North-South disparities is likely to derive from persistent differences in social norms

We consider a simple pure exchange economy with two assets: one riskless, yielding a constant return on investment, and the other risky, paying a stochastic dividend. Trading takes place in discrete time and in each trading period the price of the risky asset is fixed by imposing a market clearing condition on the sum of individual demand functions. Individual demand for the risky asset is expressed as a fraction of wealth and depends on how traders forecast future price movement. Under these assumptions we derive the stochastic dynamical system describing the evolution of price and wealth.We study the set of equilibria of this system for the case when arbitrarily many heterogeneous agents operate in the market, and we provide an asymptotic characterization of their relative performance. Abstracting from precise specification of agents' investment decisions, we show that all possible equilibrium returns belong to a one-dimensional "Equilibrium Market Line". It turns out that the system possesses isolated equilibria where a single agent dominates the market and continuous manifolds of equilibria where many agents hold finite wealth shares. The mechanism via which the market endogenously selects the dominant traders displays an optimal character in the neighborhood of the equilibria, but, at the same time, leads to the impossibility of defining a global dominance order relation among strategies.JEL codes: G12, D83.

Norms of cooperation and punishment differ across societies, but also within a single society. In an experiment with two subject pools sharing the same geographical and cultural origins, we show that opportunities for peer punishment increase cooperation among students but not in the general population. In previous studies, punishment magnified the differences across societies in people's ability to cooperate. Here, punishment reversed the order: with punishment, students cooperate more than the general population while they cooperate less without it. (JEL C72, C90, Z13)

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Socioeconomic performance differs not only across countries but within countries too and can persist even after religion, language, and formal institutions are long shared. One interpretation of these disparities is that successful regions are characterized by higher levels of trust, and, more generally, of cooperation. Here we study a classic case of within-country disparities, the Italian North-South divide, to find out whether people exhibit geographically distinct abilities to cooperate independently of many other factors and whence these differences emerge. Through an experiment in four Italian cities, we study the behavior of a sample of the general population toward trust and contributions to the common good. We find that trust and contributions vary in unison, and diminish moving from North to South. This regional gap cannot be attributed to payoffs from cooperation or to institutions, formal or informal, that may vary across Italy, as the experimental methodology silences their impact. The gap is also independent of risk and other-regarding preferences which we measure experimentally, suggesting that the lower ability to cooperate we find in the South is not due to individual "moral" flaws. The gap could originate from emergent collective properties, such as different social norms and the expectations they engender. The absence of convergence in behavior during the last 150 years, since Italy was unified, further suggests that these norms can persist overtime. Using a millenniumlong dataset, we explore whether the quality of past political institutions and the frequency of wars could explain the emergence of these differences in norms.