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Climate Negotiations in the Lab: A Threshold Public Goods Game with Heterogeneous Contributions Costs and Non-binding Voting

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Abstract

We model the climate negotiations and the countries’ individual commitments to carbon dioxide reductions as a threshold public goods game with uncertain threshold value. We find that a non-binding unanimous voting procedure on contribution vectors leads to frequent agreement on an optimal total contribution and high rates of compliance, even in the case of heterogeneous marginal contribution costs. However, groups that do not reach agreement perform worse than the baseline treatments without a voting procedure. The contribution vectors chosen by the groups point to a predominant burden-sharing rule that equalizes individual contribution costs, even at the cost of the group’s total payoff.

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Notes

  1. https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf, last accessed March 27, 2016.

  2. E.g., in the 2009 Copenhagen Accord, http://unfccc.int/resource/docs/2009/cop15/eng/11a01.pdf, last accessed March 27, 2016.

  3. This corresponds, e.g., to the assumptions by Chander and Tulkens (1995) in their theoretical analysis of emissions abatement. For a different theoretical approach to climatic tipping points see Engström and Gars (2016).

  4. E.g., Hansen et al. (2008) give a range of 350–550 ppm for an atmospheric concentration of \(\hbox {CO}_2\) which could result in sudden damages.

  5. Compare also a recent survey of theoretical models of climate change cooperation by Hovi et al. (2015) which however assumes a “non-lumpy” linear public goods game.

  6. See IPCC (2014) (p. 73ff.), Hansen et al. (2008), and Tol (2013).

  7. http://unfccc.int/resource/docs/convkp/kpeng.pdf, last accessed March 27, 2016.

  8. See UNEP (2015) for a similar ranking of future emissions.

  9. Using the median damage estimate of 135 \({US\$}/{tCO_2}\) by Tol (2013).

  10. For example, in Gallier et al. (2016) the theoretical solution of several treatments results in all players investing their entire endowment, yielding a specific proportion of contributions for rich and poor players.

  11. The studies by Tavoni et al. (2011) and Dannenberg et al. (2015) also employ sequential contributions.

  12. The treatment names are a combination of the decision rules (i.e., NBV for the non-binding vote, RG for the baseline repeated game) and the existence of heterogeneity (HOM or HET). The instructions to all treatments are available as an electronic supplement.

  13. Feige (2016) instead assumes that the contribution costs are refunded in this case.

  14. In order to make sure that all groups in all treatments face the same sequence of threshold values, the actual random draw occurs before the experiments by determining the threshold value for each of the ten rounds through a coin toss.

  15. In two additional treatments, the vote was split into two stages: first a vote on the total contribution, then a vote on the allocation of this total contribution among the group members. As these treatments did not generate any additional insights, however, the results are not reported here. See also Feige (2016, Chapter 6), which describes another experimental series with a binding vote conducted for an earlier version of this paper.

  16. For more details see Feige (2016, Chapter 1, Section 1.1.4, and Chapter 5, Section 5.2.2).

  17. Any other contribution vector (with the exception of zero contributions) requires an equilibrium path that prescribes different actions in at least two rounds (as the final round must always end in a stage-game equilibrium). We ignore these vectors in the following, as they require complex equilibrium strategies which we do not consider relevant for tacit coordination.

  18. The situation is similar to the battle-of-the-sexes game given as Example 2 in Benoit and Krishna (1993) as well as the chicken game used by Carraro and Siniscalco (1993) to motivate the stability of agreements to reduce emissions.

  19. In all treatments the sequence of threshold values in CU is 16, 12, 16, 12, 12, 12, 12, 12, 16, 12. The long sequence of low thresholds (Round 4–8) may be the cause of a significant increase of average total contributions from Round 9 (14.74 CU) to Round 10 (15.44 CU). Wilcoxon signed-rank test, all groups combined: \(z = 2.7\), \(p = 0.007\).

  20. Two-tailed Mann-Whitney-U-test applied to the absolute frequency of 4 CU contribution in each group: RGHOM versus RGHET—\(z = 3.532, p = 0.00042\); average absolute frequencies: 26.78 of 40 (RGHOM) and 2.22 of 40 (RGHET). NBVHOM versus NBVHET—\(z = 3.18, p = 0.0015\); average absolute frequencies: 34.71 of 40 (NBVHOM) and 0.25 of 40 (NBVHET).

  21. NBVHOM: 46 of 70 or 65.7%, NBVHET: 51 of 80 or 63.8%.

  22. Two RGHET groups coordinate on (2, 2, 5, 7), for example.

  23. Frequent examples include (3, 4, 4, 4) for homogeneous groups.

  24. In fact, Feige (2016, Chapter 4) describes a treatment with a similar parameterization and heterogeneous endowments, but certain threshold value, which corroborates this expectation.

  25. NBVHOM: 97.3% comply, 0.5% contribute too much, 2.2% too little; NBVHET: 99.5% comply, 0.5% contribute too little.

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Acknowledgements

We appreciate helpful comments by Timo Goeschl (the editor), Carlo Gallier, Jan Kersting, Martin Kesternich, and several anonymous reviewers, as well as the participants at the GfeW Jahrestagung 2013, the 51st Annual Meetings of the Public Choice Society, and the 2014 Spring Meeting of Young Economists. Karl-Martin Ehrhart acknowledges funding by the German Federal Ministry for Education and Research (grant number: 01LA1127B). We also thank Ann-Katrin Hanke and Nayeli Gast-Zepeda for indispensable research assistance.

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  1. Karlsruhe Institute of Technology (KIT), Institute of Economics (ECON), Neuer Zirkel 3, 76131, Karlsruhe, Germany

    Christian Feige & Karl-Martin Ehrhart

  2. Chair of Internet and Telecommunications Business, University of Passau, Dr.-Hans-Kapfinger-Str. 12, 94032, Passau, Germany

    Jan Krämer

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  1. Christian Feige
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Correspondence to Christian Feige.

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Feige, C., Ehrhart, KM. & Krämer, J. Climate Negotiations in the Lab: A Threshold Public Goods Game with Heterogeneous Contributions Costs and Non-binding Voting. Environ Resource Econ 70, 343–362 (2018). https://doi.org/10.1007/s10640-017-0123-x

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