The Pen Might Be Mightier than the Sword: How Third-party Advice or Sanction Impacts on Pro-environmental Behavior

It is recognized widely that incentives can influence the cooperation among individuals in the provision of public goods. The aim of this study is to adapt a public good game (PGG) to the environmental issue of waste management. We report an experiment where the players have to cooperate in order to reduce the cost of waste sorting treatment, modelled as a decrease in the tax rate. We consider a traditional PGG involving groups of four players. A fifth player representing the third-party is introduced in the incentivized treatments. The third-party can provide advice about the desired individual contribution (Advice Treatment), or can punish collectively noncooperative behaviors by increasing the tax rate (Sanction Treatment). Participants are asked also to perform an effort task to increase their given initial endowments. A social preference measure is introduced in the form of a social value orientation (SVO) test. We find that initially, advice, sanction and the threat of sanction significantly increase the average individual contribution level. However, applying a sanction has a stronger disciplinary effect. Also, we find results in line with Becker (1974)’s altruism hypothesis that under both sanction and threat of a sanction, high income individuals contribute more in absolute value than low income individuals.