Going Green: Framing Effects in a Dynamic Coordination Game

CentER Discussion Paper Series No. 2015-054

39 Pages Posted: 24 Nov 2015

See all articles by Reyer Gerlagh

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management

Eline van der Heijden

Tilburg University, CentER

Multiple version iconThere are 2 versions of this paper

Date Written: November 23, 2015

Abstract

We experimentally study decision-making in a novel dynamic coordination game. The game captures features of a transition between externality networks. Groups consisting of three subjects start in a stable benchmark equilibrium with network externality. Over seven rounds, they can transit to an alternative stable equilibrium based on the other network. The alternative network has higher payoffs, but the transition is slow and costly. Coordination is required to implement the transition while minimizing costs. In the experiment, the game is repeated five times, which enables groups to learn to coordinate over time. We compare a neutral language treatment with a ‘green framing’ treatment, in which meaningful context is added to the instructions. We find the green framing to significantly increase the number of profitable transitions, but also to inhibit the learning from past experiences, and thus it reduces coherence of strategies. Consequently, payoffs in both treatments are similar even though the green framing results in twice as many transitions. In the context of environmental policy, the experiment suggests general support for ‘going green’, but we also find evidence for anchoring of beliefs by green framing; proponents and opponents stick to their initial strategies.

Keywords: Cost of transition; lab experiment; dynamic stag hunt game; framing

JEL Classification: C73, C92, O44

Suggested Citation

Gerlagh, Reyer and van der Heijden, Eline, Going Green: Framing Effects in a Dynamic Coordination Game (November 23, 2015). CentER Discussion Paper Series No. 2015-054. Available at SSRN: https://ssrn.com/abstract=2694499 or http://dx.doi.org/10.2139/ssrn.2694499

Reyer Gerlagh (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Eline Van der Heijden

Tilburg University, CentER ( email )

P.O. Box 90153
Department of Economics
5000 LE Tilburg
Netherlands

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