Democracy and compliance in public goods games

I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants’ contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting

The ratchet effect in social dilemmas

In this paper, we investigate whether dynamic incentive schemes lead to a ratchet effect in a social dilemma. We test whether subjects strategically restrict their contribution levels at the beginning of a cumulative public goods game in order to avoid high obligations in the future and how this affects efficiency. The incentive schemes prescribe that individual contributions have to be at least as high as, or strictly higher than, contributions in the previous period. We observe a substantial and statistically significant ratchet effect. Participants reduce their public good contribution levels at the beginning of the game, anticipating that higher contributions imply higher minimum contribution levels in the future, which increases the risk of being exploited by freeriders. While the dynamic incentive schemes lead to increasing contribution levels over the course of the game, this increase is not strong enough to compensate the efficiency losses at the beginning

On the Choice and the Effects of Rule-Based Contribution Schemes in Public Good Games

In this experiment, we endogenize the choice of which contribution scheme is implemented in a public good game. We investigate three rule-based contribution schemes and a voluntary contribution mechanism (VCM). The game is implemented either as a Single- or a Multi-Phase Game. In the Single-Phase Game, the contribution schemes are exogenously implemented. In the Multi-Phase Game, we let subjects vote on the rule-based contribution schemes. If a scheme gets a sufficient majority it is implemented. In case a sufficient majority is failed, subjects have to make their contributions to the public good using the VCM. We find that the endogenous choice of a contribution scheme has an impact on the level of contributions. In case of a rule-based contribution scheme which equalizes payoffs, contributions are higher if subjects chose the scheme for themselves than in case the scheme is implemented exogenously. The contrary holds for the VCM. Contributions are higher if the VCM is implemented exogenously than in case a sufficient majority is failed and, therefore, subjects have to play the VCM

Investigations on the voluntary provision of local and global public goods

This doctoral thesis is based on six chapters and five related but distinct research articles and contributes to the exceedingly growing literature in behavioral environmental economics. Primarily, this thesis aims at designing and testing institutional mechanisms that successfully address social dilemmas at the core of a variety of environmental challenges arising on different scales at the global and local level. After an introductory chapter, Chapter 2 and Chapter 3 address aspects of international climate negotiations to testbed institutions that aim to foster cooperation among sovereign and heterogeneous agents at the global level. Chapter 2 investigates whether groups are able to reach an agreement on how to share the costs of providing a public good. By capturing pre-existing public good provision levels, Chapter 3 gives agents the opportunity to increase contributions to the public good beyond a status-quo, maintain the current level, or even undo pre-existing efforts. Chapter 4 forms the bridge to more localized public good problems. It takes into account that local and global public goods are not necessarily mutually exclusive and investigates whether agents' narrow concerns for local outcomes can harm efficiency at the global level. Chapter 4 and Chapter 5 focus on more localized public good problems by taking into account that local public good problems have authorities with permissions to intervene and regulate de jure, but de facto costly monitoring and sanctioning can preclude the emergence of regulations. Chapter 4 tests the effects of non-enforced extraction limits on extraction behavior in a common-pool resource game. Chapter 5 tests if, how, and why the effect of a contribution rule in a public goods game depends on how the rule has been implemented: whether it was democratically chosen or externally imposed

Consistent or balanced? : On the dynamics of voluntary contributions

We investigate the dynamic effects of a charitable lottery and an income tax on donations. The analysis is based on a two-round dictator game with the subject’s charity of choice as recipient and additional incentives in the first round only. The immediate effect of a charitable lottery leads to higher contributions and we cannot find substantial crowding out of voluntary contributions in the presence of an income tax. These economic interventions weakly spill-over to the subsequent donation decisions without additional incentives. Our results suggest the presence of consistency seeking behaviour. This is especially true for a subgroup of participants with a rule-based mind-set and our research shows the importance of the subjects’ moral framework in the context of dynamic pro-social behaviour

Did Fukushima matter? : Empirical evidence of the demand for climate protection in Germany

This paper investigates the extent to which the Fukushima Daiichi nuclear disaster of March 2011 has had an impact on the private demand for climate protection in Germany. Data are taken from two framed field experiments (Löschel et al. 2013a, b) conducted before and after the disaster. We find that the demand for climate protection in the experiment after the nuclear disaster is significantly higher than in the experiment before the disaster

The choice of institutions to solve cooperation problems: a survey of experimental research

A growing experimental literature studies the endogenous choice of institutions to solve cooperation problems arising in prisoners’ dilemmas, public goods games, and common pool resource games. Participants in these experiments have the opportunity to influence the rules of the game before they play the game. In this paper, we review the experimental literature of the last 20 years on the choice of institutions and describe what has been learned about the quality and the determinants of institutional choice. Almost all institutions improve cooperation if they are implemented, but they are not always implemented by the players. Institutional costs, remaining free‐riding incentives, and a lack of learning opportunities are the most important barriers. At the individual level, own cooperativeness and beliefs about other players’ behavior can be identified as important determinants of institutional choice. Cooperation tends to be higher under endogenously chosen institutions than exogenously imposed institutions. However, a significant share of players fails to implement the institution and they often perform poorly, which is why we cannot conclude that letting people choose is better than enforcing institutions from outside

KfW/ZEW CO2 Barometer 2014 – Manufacturing Industry Edition: Rising energy costs and more competition - drivers for investment in energy efficiency?

As a complementary study, KfW Bankengruppe and the ZEW have developed a second annual survey in the framework of the KfW/ZEW-CO2-Barometer: the KfW/ZEW-CO2-Barometer – Manufacturing Industry Edition. The aim is to shed light on recent developments in the German manufacturing industry driven by European climate and energy regulations as well as the German energy transition in particular. The survey covered topics concerning energy price expectations, investments in energy efficiency and the German energy transition. Main Results of the Survey: Energy Efficiency Assessments Are a Prerequisite for Investments in Energy Efficiency. Companies Expect Increasing Energy Prices and their Most Important Sales Markets to Be Global. Half of the Companies Use Energy Consulting Services. Energy Contracting Is Being Used only by a Minority. Grid Expansion is Still Considered as the Major Challenge of the German Energy Transition

Klimaabkommen von Paris: Die vereinbarten dynamischen Anreize wirken kontraproduktiv

Das Pariser Klimaabkommen von 2015 ist mit der großen Hoffnung verbunden, die globale Erwärmung auf das vereinbarte 2-Grad-Ziel zu beschränken. Dazu sind substanzielle Klimaschutzbeiträge unabdingbar. Ein zentraler Baustein des Abkommens ist ein dynamisches Anreizsystem, das sogenannte „Ratcheting“. Es gibt den Vertragsstaaten vor, ihre Beiträge zum Klimaschutz in regelmäßigen Abständen transparent darzulegen und über die Zeit schrittweise zu erhöhen. Die Auswirkungen dieses Anreizmechanismus auf das Verhalten der beteiligten Akteure sind jedoch weitestgehend unklar. Unklar ist somit auch, ob sich die in Paris vereinbarte neue Vorgehensweise überhaupt als ein gangbarer Weg erweist, um das 2-Grad-Ziel zu erreichen. Das vorliegende ZEW policy brief greift Ergebnisse eines ökonomischen Laborexperiments auf, das den Effekt des „Ratcheting“ unter kontrollierten Bedingungen systematisch untersucht hat. Die gewonnenen Einsichten geben wenig Anlass zu Optimismus. Finanziert wurde das Laborexperiment im Rahmen des Projekts „Incentives, Fairness and Compliance in International Environmental Agreements (InFairCom)“ vom Bundesministerium für Bildung und Forschung (BMBF