The Efficiency of Direct Public Involvement in Environmental Policymaking: An Experimental Test

38 Pages Posted: 17 Jul 2008

See all articles by Christopher J. Bruce

Christopher J. Bruce

University of Calgary - Department of Economics

Jeremy E. Clark

University of Canterbury, New Zealand - Department of Economics

Date Written: July 15, 2008

Abstract

In one of the most ambitious forms of environmental decision-making, representatives of interested parties - environmentalists, developers, farmers, loggers, miners, etc. - are charged with the responsibility of developing a set of public policies that is acceptable to all of them. Although this approach has become increasingly popular, and has been widely discussed in the academic literature, little is known about the characteristics of the outcomes that are reached in this type of negotiation. We do not know, for example, whether these outcomes meet the standard criteria for efficiency or equity.

In this paper, we use laboratory experiments to test whether a number of axiomatic models of bargaining can predict the behavior of the parties to environmental decision making. In recognition of the multi-dimensional aspect of most public land use conflicts, we ask pairs of subjects to negotiate over two goods, without the possibility of cash side payments. We thus provide one of the first experimental tests of a prediction associated with the Edgeworth Box: that parties with an initial endowment that is Pareto inefficient will make trades until they reach a Pareto efficient allocation. We further test whether parties in particular reach the Nash bargain when it coincides with or conflicts with outcomes that maximise the parties' joint payoffs and with outcomes at which the parties' receive equal payoffs. Finally, the effect of providing parties with full or partial information regarding payoffs is also examined.

Suggested Citation

Bruce, Christopher J. and Clark, Jeremy Edmund, The Efficiency of Direct Public Involvement in Environmental Policymaking: An Experimental Test (July 15, 2008). Available at SSRN: https://ssrn.com/abstract=1160426 or http://dx.doi.org/10.2139/ssrn.1160426

Christopher J. Bruce (Contact Author)

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada
403-220-4093 (Phone)
402-282-5262 (Fax)

Jeremy Edmund Clark

University of Canterbury, New Zealand - Department of Economics ( email )

Private Bag 4800
Christchurch
New Zealand

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