Pro-Social Behavior, Heterogeneity and Incentives: Experimental Evidence from the Local Commons in Colombia

43 Pages Posted: 27 Jul 2015  

Sandra Polania-Reyes

University College London - Department of Economics

Date Written: June 11, 2015

Abstract

Promotion of pro-social behavior in social dilemmas has been subject to an increased interest among social scientists and policy makers due to the relevance of Common Pool Resources (CPR) in long-run human well-being. Although economists know a lot about the effect of incentives on pro-social behavior, we understand very little about how to promote pro-social behavior efficiently. For example, we accept that monetary incentives sometimes are less effective than would be predicted for entirely self-regarding individuals but we are unable to identify the mechanisms by which these crowding effects may occur.

This study examines a unique experimental data set of a CPR game with 1095 individuals (79% are CPR users that are closely related to a real resource). Our purpose is twofold. On one hand, it goes ahead on the experimental analysis by accounting for unobserved heterogeneity of individuals' social preferences and group composition of types within each group. On the other hand, it explores the role of heterogeneity of pro-social preferences on achieving the most efficient economic incentive.

First, we drop the assumption that all individuals are all self-regarding and develop several models of pure Nash strategies for our CPR game when individuals are motivated by a combination of self interest and preferences for altruism, reciprocity or inequity aversion. Second, we estimate individual heterogeneity by using a random coefficients model approach and classify individual social preferences (according to their behavior in the baseline phase) by assigning a type to every participant. Third, we compare the role of heterogeneity of preferences in social efficiency across incentives and confirm the existence of different effects of incentives on each type; the subsidy is found to be the most socially efficient incentive. Finally, we obtain exogenous determinants of individual type such as level of education, perceptions on the CPR, perceived interest in cooperation among the community, whether the participant does volunteer work and whether the CPR is the household main economic activity of the household; we also obtain endogenous determinants such as the composition of types in the group and their demographic characteristics.

Keywords: Common-pool resources, social preferences, laboratory and field experiments, explicit incentives, inequity aversion, altruism, random coefficients model

JEL Classification: A13, C23, C51, D64, H39, Q20, Q28

Suggested Citation

Polania-Reyes, Sandra, Pro-Social Behavior, Heterogeneity and Incentives: Experimental Evidence from the Local Commons in Colombia (June 11, 2015). Available at SSRN: https://ssrn.com/abstract=2634253 or http://dx.doi.org/10.2139/ssrn.2634253

Sandra Polania-Reyes (Contact Author)

University College London - Department of Economics ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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