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How Social Preferences Influence the Stability of a Climate Coalition

Lin, Yu-Hsuan (2018): How Social Preferences Influence the Stability of a Climate Coalition.

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This study examines the impact of social preferences on the individual incentives of participating in climate coalitions with laboratory experimental evidence. The theoretical result suggests that, when players are self-interested, dominant strategy equilibrium could exist conditionally. Players could be either critical or non-critical to an effective coalition. Their dominant strategy, either joining or not joining, depends on its contribution to total abatement. However, inequality-averse individuals may reshape the coalition formation. The laboratory evidence in this study supports that most players were inequality-averse and the coalition size was usually larger than the dominant strategy equilibrium and unstable. Nevertheless, the inequality-averse attitude was positively associated with the incentives of participation. Particularly, when they were non-critical players, egalitarians were likely to give up the free riding benefit by joining a coalition. Our findings help to understand the climate coalition formation.

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