Advertisement

Environmental and Resource Economics

, Volume 61, Issue 3, pp 365–383 | Cite as

On the Provision of Public Goods with Probabilistic and Ambiguous Thresholds

  • Astrid Dannenberg
  • Andreas Löschel
  • Gabriele Paolacci
  • Christiane Reif
  • Alessandro Tavoni
Article

Abstract

Many natural systems involve thresholds that, once triggered, imply irreversible damages for the users. Although the existence of such thresholds is undisputed, their location is highly uncertain. We explore experimentally how threshold uncertainty affects collective action in a series of threshold public goods games. Whereas the public good is always provided when the exact value of the threshold is known, threshold uncertainty is generally detrimental for the public good provision as contributions become more erratic. The negative effect of threshold uncertainty is particularly severe when it takes the form of ambiguity, i.e. when players are not only unaware of the value of the threshold, but also of its probability distribution. Early and credible commitment helps groups to cope with uncertainty.

Keywords

Cooperation Experiment Public good Threshold uncertainty Ambiguity 

JEL Classification

C72 C92 H41 Q54 

References

  1. Alley RB, Marotzke J, Nordhaus WD, Overpeck JT, Peteet DM, Pielke RA Jr, Pierrehumbert RT, Rhines PB, Stocker TF, Talley LD, Wallace JM (2003) Abrupt climate change. Science 299(5615):2005–2010CrossRefGoogle Scholar
  2. Alpizar F, Carlsson F, Naranjo MA (2011) The effect of ambiguous risk, and coordination of farmers’ adaptation to climate change—a framed field experiment. Ecol Econ 70:2317–2326CrossRefGoogle Scholar
  3. Au W (2004) Criticality and environmental uncertainty in step-level public goods dilemmas. Group Dyn Theory Res Pract 8(1):40–61CrossRefGoogle Scholar
  4. Bagnoli M, Lipman BL (1989) Provision of public goods: fully implementing the core through private contributions. Rev Econ Stud 56(4):583–601CrossRefGoogle Scholar
  5. Balliet D (2010) Communication and cooperation in social dilemmas: a meta-analytic review. J Confl Resolut 54(1):39–57CrossRefGoogle Scholar
  6. Barnosky AD, Hadly EA, Bascompte J, Berlow EL, Brown JH, Fortelius M, Getz WM, Harte J, Hastings A, Marquet PA, Martinez ND, Mooers A, Roopnarine P, Vermeij G, Williams JW, Gillespie R, Kitzes J, Marshall C, Matzke N, Mindell DP, Revilla E, Smith AB (2012) Approaching a state shift in Earth’s biosphere. Nature 486:52–58CrossRefGoogle Scholar
  7. Barrett S (2003) Environment and statecraft. University Press, OxfordCrossRefGoogle Scholar
  8. Barrett S (2013) Climate treaties and approaching catastrophes. J Environ Econ Manag 66(2):235–250CrossRefGoogle Scholar
  9. Barrett S, Dannenberg A (2012) Climate negotiations under scientific uncertainty. Proc Natl Acad Sci 109(43):17372–17376CrossRefGoogle Scholar
  10. Barrett S, Dannenberg A (2014) Sensitivity of collective action to uncertainty about climate tipping points. Nat Clim Change 4:36–39CrossRefGoogle Scholar
  11. Bhatti Y, Lindskow K, Pedersen LH (2010) Burden-sharing and global climate negotiations: the cas of the Kyoto protocol. Clim Policy 10(2):131–147CrossRefGoogle Scholar
  12. Camerer C, Weber M (1992) Recent developments in modeling preferences: uncertainty and ambiguity. J Risk Uncertain 5(4):325–370CrossRefGoogle Scholar
  13. Chen XP, Komorita SS (1994) The effects of communication and commitment in a public goods social dilemma. Organ Behav Hum Decis Process 60:367–386CrossRefGoogle Scholar
  14. Chow CC, Sarin RK (2002) Known, unknown, and unknowable uncertainties. Theory Decis 52(2):127–138CrossRefGoogle Scholar
  15. Croson R, Marks M (2000) Step returns in threshold public goods: a meta- and experimental analysis. Exp Econ 2(3):239–259CrossRefGoogle Scholar
  16. Di Mauro C, Maffioletti A (2004) Attitudes to risk and attitudes to uncertainty: experimental evidence. Appl Econ 36(4):357–372CrossRefGoogle Scholar
  17. Ellsberg D (1961) Risk, ambiguity, and the savage axioms. Q J Econ 75(4):643–669CrossRefGoogle Scholar
  18. Fehr E, Fischbacher U, Gächter S (2002) Strong reciprocity, human cooperation, and the enforcement of social norms. Hum Nat 13(1):1–25CrossRefGoogle Scholar
  19. Fischbacher U (2007) Z-tree: Zurich toolbox for ready-made economic experiments. Exp Econ 10(2):171–178CrossRefGoogle Scholar
  20. Fischbacher U, Gächter S, Fehr E (2001) Are people conditionally cooperative? Evidence from a public goods experiment. Econ Lett 71:397–404CrossRefGoogle Scholar
  21. Gangadharan L, Nemes V (2009) Experimental analysis of risk and uncertainty in provisioning private and public goods. Econ Inq 47(1):146–164CrossRefGoogle Scholar
  22. Gustafsson M, Biel A, Gärling T (1999) Outcome-desirability in resource management problems. Think Reason 5(4):327–337CrossRefGoogle Scholar
  23. Gustafsson M, Biel A, Gärling T (2000) Egoism bias in social dilemmas with resource uncertainty. Group Process Intergroup Relat 3:351–365CrossRefGoogle Scholar
  24. Hasson R, Löfgren A, Visser M (2010) Climate change in a public goods game: investment decision in mitigation versus adaptation. Ecol Econ 70:331–338CrossRefGoogle Scholar
  25. Hasson R, Löfgren A, Visser M (2012) Treatment effects of climate change risk on mitigation and adaptation behaviour in an experimental setting. S Afr J Econ 80(3):415–430CrossRefGoogle Scholar
  26. Hey JD, Lotito G, Maffioletti A (2010) The descriptive and predictive adequacy of theories of decision making under uncertainty/ambiguity. J Risk Uncertain 41:81–111CrossRefGoogle Scholar
  27. Johansson-Stenman O, Konow J (2010) Fair air: distributive justice and environmental economics. Environ Resour Econ 46:147–166CrossRefGoogle Scholar
  28. Knight FH (1921) Risk, uncertainty, and profit, 1st edn. Hart, Schaffner & Marx, Houghton Mifflin Co., Boston, MAGoogle Scholar
  29. Kurzban R, McCabe K, Smith VL, Wilson BJ (2001) Incremental commitment and reciprocity in a real-time public goods game. Personal Soc Psychol Bull 27(12):1662–1673CrossRefGoogle Scholar
  30. Kriegler E, Hall JW, Hermann H, Dawson R, Schellnhuber HJ (2009) Imprecise probability assessment of tipping points in the climate system. Proc Natl Acad Sci 106(13):5041–5046CrossRefGoogle Scholar
  31. Lade S, Tavoni A, Levin S, Schlueter M (2013) Regime shifts in a social-ecological system. Theor Ecol 6:359–372CrossRefGoogle Scholar
  32. Lenton TM, Held H, Kriegler E, Hall JW, Lucht W, Rahmstorf S, Schellnhuber HJ (2008) Tipping elements in the Earth’s climate system. Proc Natl Acad Sci 105(6):1786–1793CrossRefGoogle Scholar
  33. Levati MV, Morone A (2013) Voluntary contributions with risky and uncertain marginal retursn: the importance of the parameter values. J Public Econ Theory 15(5):736–744CrossRefGoogle Scholar
  34. Levati MV, Morone A, Fiore A (2009) Voluntary contributions with imperfect information: an experimental study. Public Choice 138:199–216CrossRefGoogle Scholar
  35. McBride M (2006) Discrete public goods under threshold uncertainty. J Public Econ 90:1181–1199CrossRefGoogle Scholar
  36. McBride M (2010) Threshold uncertainty in discrete public good games: an experimental study. Econ Gov 11(1):77–99CrossRefGoogle Scholar
  37. Milinski M, Sommerfeld RD, Krambeck H-J, Reed FA, Marotzke J (2008) The collective-risk social dilemma and the prevention of simulated dangerous climate change. Proc Natl Acad Sci 105(7):2291–2294CrossRefGoogle Scholar
  38. Morone A, Ozdemir O (2012) Displaying uncertain information about probability: experimental evidence. Bull Econ Res 64(2):0307–3378CrossRefGoogle Scholar
  39. Nitzan S, Romano RE (1990) Private provision of a discrete public good with uncertain cost. J Public Econ 42(3):357–370CrossRefGoogle Scholar
  40. Ostrom E (2000) Collective action and the evolution of social norms. J Econ Perspect 14(3):137–158CrossRefGoogle Scholar
  41. Palfrey TR, Rosenthal H (1984) Participation and the provision of public goods: a strategic analysis. J Public Econ 24:171–193CrossRefGoogle Scholar
  42. Rapoport A, Budescu DV, Suleiman R, Weg E (1992) Social dilemmas with uniformly distributed resources. In: Liebrand WBG, Messick DM, Wilke HAM (eds) Social dilemmas: theoretical issues and research findings. Pergamon Press, Oxford, pp 43–57Google Scholar
  43. Ringius L, Torvanger A, Underdal A (2002) Burden sharing and fairness principles in international climate policy. Int Environ Agreem Polit Law Econ 2:1–22CrossRefGoogle Scholar
  44. Rockström J, Steffen W, Noone K, Persson Å, Chapin S III, Lambin EF, Lenton TM, Scheffer M, Folke C, Schellnhuber HJ, Nykvist B, de Wit CA, Hughes T, van der Leeuw S, Rodhe H, Sörlin S, Snyder PK, Costanza R, Svedin U, Falkenmark M, Karlberg L, Corell RW, Fabry VJ, Hansen J, Walker B, Liverman D, Richardson K, Crutzen P, Foley JA (2009) A safe operating safe for humanity. Nature 461:472–475CrossRefGoogle Scholar
  45. Suleiman R (1997) Provision of step-level public goods under uncertainty a theoretical analysis. Ration Soc 9(2):163–187CrossRefGoogle Scholar
  46. Suleiman R, Budescu DV, Rapoport A (2001) Provision of step-level public goods with uncertain provision threshold and continuous contribution. Group Decis Negot 10(3):253–274CrossRefGoogle Scholar
  47. Tavoni A, Dannenberg A, Kallis G, Löschel A (2011) Inequality, communication and the avoidance of disastrous climate change in a public goods game. Proc Natl Acad Sci 108(29):11825–11829CrossRefGoogle Scholar
  48. Wit A, Wilke A (1998) Public good provision under environmental and social uncertainty. Eur J Soc Psychol 28(2):249–256CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Astrid Dannenberg
    • 1
    • 2
  • Andreas Löschel
    • 3
    • 4
  • Gabriele Paolacci
    • 5
  • Christiane Reif
    • 3
  • Alessandro Tavoni
    • 6
  1. 1.Earth InstituteColumbia UniversityNew YorkUSA
  2. 2.Environmental EconomicsUniversity of GothenburgGothenburgSweden
  3. 3.Centre for European Economic Research (ZEW)MannheimGermany
  4. 4.Alfred Weber Institute for EconomicsUniversity of HeidelbergHeidelbergGermany
  5. 5.Rotterdam School of ManagementErasmus UniversityRotterdamThe Netherlands
  6. 6.Grantham Research Institute on Climate Change and the EnvironmentLondon School of Economics and Political ScienceLondon UK

Personalised recommendations