Coordinating to Protect the Global Climate: Experimental Evidence on the Role of Inequality and Commitment

Abstract:     
Free riding and coordination difficulties are held to be the primary causes of cooperation breakdown among nonrelatives. These thwarting effects are particularly severe in the absence of effective monitoring institutions capable of sanctioning deviant behavior. Unfortunately, solutions to global environmental dilemmas, like climate change, cannot depend on coercion mechanisms, given the transnational effects of emissions. A further complication is that it yields "common but differentiated responsibilities." Such asymmetries in wealth and carbon responsibilities among the actors, and the ensuing issues of equity, might further impede cooperation. Yet, a growing literature stresses the importance of non-economic factors in explaining human behavior; therefore, instruments that go beyond the traditional incentives might prove effective in facilitating the task. Given the empirical nature of the problem, we address it by means of a controlled laboratory experiment: a framed threshold public goods game is used to investigate the degree of cooperation and coordination achieved by groups of six participants in combating simulated catastrophic climate change. While necessarily simple for the sake of tractability, the game is designed to incorporate key real-world issues, such as inequity and the impact of emergent institutions based on nonbinding "pledge and review" mechanisms.

Number of Pages in PDF File: 32

Keywords: Experimental Economics, Threshold Public Goods Game, Climate Change, Inequality, Pledge

JEL Classification: C72, C92, Q54

working papers series