Can More Be Less? An Experimental Test of the Resource Curse

Several scholars have argued that abundant natural resources can be harmful to economic performance under bad institutions and helpful when institutions are good. These arguments have either been theoretical or based on naturally occurring variation in natural resource wealth. We test this theory by using a laboratory experiment to reap the benefits of randomized control. We conduct this experiment in a virtual world (Second Life™) to make institutions more visceral. We find support for the theory. 

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