Panic in the Lab : The Effect of Extreme External Risks and Bolstering Cooperation in Public Goods Games

Cooperation in providing common goods is crucial for flourishing social systems, yet rare but extreme events, such as pandemics, stock market collapses, and terror attacks, pose a risk that could undermine cooperation. We extend the public goods game (PGG) to investigate the relationship between extreme external risks and cooperation in social dilemmas in a laboratory experiment. By incorporating risk as an external random variable in the PGG, independent of the participants’ contributions, we preserve the economic equilibrium that predicts non-cooperation in the original game. Furthermore, we examine whether cooperation can be restored by the relatively simple intervention of communicating countermeasures while keeping the actual risk constant. Our experimental results reveal that extreme risks indeed decrease contributions on average by about 20%; however, communicating countermeasures increases cooperation on average by about 10%. Specifically, in the first interactions, cooperation levels can even reach those observed in the riskless base treatment. Our results suggest that communicating countermeasures could help reinforce social cohesion and resilience in the face of rare but extreme risks