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A Laboratory Test of Canadian Proposals for an Emission Trading Program

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Author Info

  • Stuart Mestelman
  • Rob Moir
  • Andrew Muller

Abstract

We investigate the effects of heterogeneity, incomplete information and communication on aggregate contributions to a public good using the voluntary contribution mechanism in a nonlinear laboratory environment. One-dimensional heterogeneity (heterogeneity in income or preferences) and two-dimensional heterogeneity (heterogeneity in income and preferences) both increase voluntary contributions. The effect is greatest when information is incomplete in the sense that subjects do not know each other’s payoffs. Incomplete information also reduces contributions in the homogeneous case. Communication reverses the relative importance of one and two-dimensional heterogeneity in promoting cooperation.

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File URL: http://socserv.socsci.mcmaster.ca/econ/faculty/mullera/papers/pg6.pdf
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Bibliographic Info

Paper provided by McMaster University in its series McMaster Experimental Economics Laboratory Publications with number 1998-03.

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Length: 31 pages
Date of creation: Mar 1998
Date of revision:
Handle: RePEc:mcm:mceelp:1998-03

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Cited by:
  1. Stuart Mestelman & Andrew Muller, 1997. "What Have We Learned From Emissions Trading Experiments?," McMaster Experimental Economics Laboratory Publications 1997-03, McMaster University.
  2. L. Gangadharan & A. Farrell & R. Croson, 2005. "Investment Decisions and Emissions Reductions : Results from Experiments in Emissions Trading," Department of Economics - Working Papers Series 942, The University of Melbourne.
  3. Stuart Mestelman, 2000. "Environmental Policy: Lessons from the Laboratory," McMaster Experimental Economics Laboratory Publications 2000-01, McMaster University.
  4. Cason, Timothy N. & Gangadharan, Lata, 2006. "Emissions variability in tradable permit markets with imperfect enforcement and banking," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 199-216, October.

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