How Social Preferences Influence the Stability of a Climate Coalition

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

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: experimental design; social preference; inequality-aversion; international environmental agreements; climate coalition
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice ; Clubs ; Committees ; Associations; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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