Mistrust and Opposition to Large-Scale Projects: An Experiment on the Role of Uncertainty

CentER Discussion Paper Series No. 2017-053

41 Pages Posted: 22 Dec 2017

See all articles by Riccardo Ghidoni

Riccardo Ghidoni

Tilburg University - Department of Economics; University of Milano-Bicocca - Department of Economics, Management & Statistics

Date Written: August 24, 2017

Abstract

The realization of large-scale projects such as landfills, power plants, etc. is often hindered by the opposition of the possible host community. I study the case in which the opposition emerges from the mistrust of the host community toward the proposer of the project due to an informational asymmetry on the project's returns. In a novel laboratory experiment, I compare a baseline opposition game to treatments including the possibility to endogenously disclose information about the project or to offer compensatory transfers to the host. Both tools are more effective than expected in mitigating oppositions, but have heterogeneous impacts on the creation of social surplus and its allocation among the stakeholders.

Keywords: trust, NIMBY; Information disclosure; Compensatory transfers

JEL Classification: C70; C90; D03; Q53

Suggested Citation

Ghidoni, Riccardo, Mistrust and Opposition to Large-Scale Projects: An Experiment on the Role of Uncertainty (August 24, 2017). CentER Discussion Paper Series No. 2017-053, Available at SSRN: https://ssrn.com/abstract=3089677 or http://dx.doi.org/10.2139/ssrn.3089677

Riccardo Ghidoni (Contact Author)

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

University of Milano-Bicocca - Department of Economics, Management & Statistics ( email )

Piazza dell’Ateneo Nuovo 1, 20126 Milano
Milano, 20126
Italy

HOME PAGE: http://https://www.unimib.it/riccardo-ghidoni

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