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On the Provision of Public Goods with Probabilistic and Ambiguous Thresholds

Author

Listed:
  • Astrid Dannenberg

    ()

  • Andreas Löschel

    ()

  • Gabriele Paolacci

    ()

  • Christiane Reif

    ()

  • Alessandro Tavoni

    ()

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. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Astrid Dannenberg & Andreas Löschel & Gabriele Paolacci & Christiane Reif & Alessandro Tavoni, 2015. "On the Provision of Public Goods with Probabilistic and Ambiguous Thresholds," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 365-383, July.
  • Handle: RePEc:kap:enreec:v:61:y:2015:i:3:p:365-383
    DOI: 10.1007/s10640-014-9796-6
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Vesely, Stepan & Wengström, Erik, 2017. "Risk and Cooperation: Experimental Evidence from Stochastic Public Good Games," Working Papers 2017:3, Lund University, Department of Economics.
    2. Greer Gosnell & Alessandro Tavoni, 2016. "A bargaining experiment on heterogeneity and side deals in climate negotiations," GRI Working Papers 249, Grantham Research Institute on Climate Change and the Environment.
    3. repec:eee:gamebe:v:104:y:2017:i:c:p:760-774 is not listed on IDEAS
    4. Björk, Lisa & Kocher, Martin & Martinsson, Peter & Nam Khanh, Pham, 2016. "Cooperation under risk and ambiguity," Working Papers in Economics 683, University of Gothenburg, Department of Economics.
    5. R. Ghidoni & G. Calzolari & M. Casari, 2017. "Climate Change: Behavioral Responses from Extreme Events and Delayed Damages," Working Papers wp2002, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Doruk Iris & Alessandro Tavoni, 2016. "Tipping Points and Loss Aversion in International Environmental Agreements," Working Papers 2016.25, Fondazione Eni Enrico Mattei.
    7. Doncaster, C. Patrick & Tavoni, Alessandro & Dyke, James G., 2017. "Using Adaptation Insurance to Incentivize Climate-change Mitigation," Ecological Economics, Elsevier, vol. 135(C), pages 246-258.
    8. Ghidoni, Riccardo & Calzolari, Giacomo & Casari, Marco, 2017. "Climate change : Behavioral responses from extreme events and delayed damages," Other publications TiSEM 9868b8c2-8848-48d9-9eb6-0, Tilburg University, School of Economics and Management.
    9. G. Calzolari & M. Casari & R. Ghidoni, 2016. "Carbon is Forever: a Climate Change Experiment on Cooperation," Working Papers wp1065, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. Lin, Yu-Hsuan, 2018. "How Social Preferences Influence the Stability of a Climate Coalition," MPRA Paper 85428, University Library of Munich, Germany.
    11. Lin, Yu-Hsuan, 2018. "Reciprocity Reciprocity in Climate Coalition Formationin Climate Coalition Formation," MPRA Paper 86494, University Library of Munich, Germany.
    12. repec:eee:eneeco:v:68:y:2017:i:s1:p:103-115 is not listed on IDEAS

    More about this item

    Keywords

    Cooperation; Experiment; Public good; Threshold uncertainty; Ambiguity; C72; C92; H41; Q54;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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