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

Abstract.The marked difference in the development of the North and the South of Italy represents a prototypical case of seemingly intractable within-country disparities. Recent research found that a plausible determinant of this socio-economic gap would be a difference in the ability to cooperate. Through a laboratory experiment we investigate whence this difference derives, whether from different preferences or from different beliefs. Our findings indicate that Northerners and Southerners share the same individual pro-social preferences, and that the cooperation gap lies rather in the pessimistic beliefs that Southerners have about their cooperativeness. Southerners, furthermore, manifest a stronger aversion to social risk, as compared to the risk of nature. A policy implication is that an intervention or an event that reduced pessimistic beliefs would directly boost cooperation levels.

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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