Do Equity Preferences Matter in Climate Negotiations? An Experimental Investigation

38 Pages Posted: 6 Nov 2007 Last revised: 26 Aug 2008

See all articles by Astrid Dannenberg

Astrid Dannenberg

University of Gothenburg

Bodo Sturm

Leipzig University of Applied Sciences - HTWK Leipzig

Carsten Vogt

Zentrum fuer EuropSische Wirtschaftsforschung (ZEW Centre for European Economic Research), Environmental & Resource Economics

Date Written: 2007

Abstract

This paper investigates in how far equity preferences may matter for climate negotiations. For this purposes we conducted a simple experiment with people who have been involved in international climate policy. The experiment, which was run via the Internet, consisted of two simple non-strategic games suited to measure the parameters of inequity aversion in a Fehr and Schmidt (1999) utility function. We find that our participants show aversion against advantageous as well as disadvantageous inequity to a considerable amount. Moreover, the degree of inequity aversion is higher compared to that of students in the similar study of Dannenberg et al. (2007). Regarding the geographical variety in our sample, we cannot confirm significant differences in the degree of inequity aversion between different regions in the world, which is in line with previous findings from the experimental literature. This finding lends support to the hypothesis that equity preferences are "hard-wired" and not much influenced by socio-economic or cultural circumstances.

Keywords: individual preferences, inequity aversion, climate policy, experimental economics, public goods

JEL Classification: C91, C92, H41

Suggested Citation

Dannenberg, Astrid and Sturm, Bodo and Vogt, Carsten, Do Equity Preferences Matter in Climate Negotiations? An Experimental Investigation (2007). ZEW - Centre for European Economic Research Discussion Paper No. 07-063, Available at SSRN: https://ssrn.com/abstract=1027873 or http://dx.doi.org/10.2139/ssrn.1027873

Astrid Dannenberg (Contact Author)

University of Gothenburg ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

Bodo Sturm

Leipzig University of Applied Sciences - HTWK Leipzig ( email )

Leipzig
Germany

Carsten Vogt

Zentrum fuer EuropSische Wirtschaftsforschung (ZEW Centre for European Economic Research), Environmental & Resource Economics ( email )

Eco-management
D-68161 Mannheim
Germany
+49 6211235200 (Phone)
+49 6211235226 (Fax)

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