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Inter-Generational Games with Dynamic Externalities and Climate Change Experiments

Author

Listed:
  • Ekaterina Sherstyuk

    () (Department of Economics, University of Hawaii at Manoa)

  • Nori Tarui

    () (Department of Economics, University of Hawaii at Manoa)

  • Majah-Leah V. Ravago

    () (School of Economics, University of the Philippines Diliman)

  • Tatsuyoshi Saijo

    () (Kochi University of Technology)

Abstract

Dynamic externalities are at the core of many long-term environmental problems, from species preservation to climate change mitigation. We use laboratory experiments to compare welfare outcomes and underlying behavior in games with dynamic externalities under two distinct settings: traditionally-studied games with infinitely-lived decision makers, and more realistic inter-generational games. We show that if decision makers change across generations, resolving dynamic externalities becomes more challenging for two distinct reasons. First, decision makers’ actions may be short-sighted due to their limited incentives to care about the future generations’ welfare. Second, even when the incentives are perfectly aligned across generations, strategic uncertainty about the follower actions may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Inter-generational learning through history and advice from previous generations may improve dynamic efficiency, but may also lead to persistent myopia.

Suggested Citation

  • Ekaterina Sherstyuk & Nori Tarui & Majah-Leah V. Ravago & Tatsuyoshi Saijo, 2013. "Inter-Generational Games with Dynamic Externalities and Climate Change Experiments," Working Papers 201320, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201320
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    Cited by:

    1. 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.
    2. Shibly Shahrier & Koji Kotani & Tatsuyoshi Saijo, 2017. "Intergenerational sustainability dilemma and a potential solution: Future ahead and back mechanism," Working Papers SDES-2017-9, Kochi University of Technology, School of Economics and Management, revised Aug 2017.
    3. Yoshinori Nakagawa & Koji Kotani & Yoshio Kamijo & Tatsuyoshi Saijo, 2016. "Solving intergenerational sustainability dilemma through imaginary future generations: A qualitative-deliberative approach," Working Papers SDES-2016-14, Kochi University of Technology, School of Economics and Management, revised Oct 2016.
    4. repec:eee:eneeco:v:68:y:2017:i:s1:p:103-115 is not listed on IDEAS
    5. Shibly Shahrier & Koji Kotani & Tatsuyoshi Saijo, 2016. "Intergenerational sustainability and the degree of capitalism in the society: A field experiment," Working Papers SDES-2016-10, Kochi University of Technology, School of Economics and Management, revised Jul 2016.
    6. Delaney, Jason & Jacobson, Sarah, 2015. "The good of the few: Reciprocal acts and the provision of a public bad," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 46-55.
    7. Jörg Spiller & Friedel Bolle, 2013. "Inter-Generational Thoughtfulness in a Dynamic Public Good Experiment," Discussion Paper Series RECAP15 008, RECAP15, European University Viadrina, Frankfurt (Oder).
    8. 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.
    9. 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.
    10. Raja Timilsina & Koji Kotani & Yoshinori Nakagawa & Tatsuyoshi Saijo Saijo, 2017. "Can deliberative democracy resolve intergenerational sustainability dilemma?," Working Papers SDES-2017-20, Kochi University of Technology, School of Economics and Management, revised Oct 2017.
    11. Agranov, Marina & Fréchette, Guillaume & Palfrey, Thomas & Vespa, Emanuel, 2016. "Static and dynamic underinvestment: An experimental investigation," Journal of Public Economics, Elsevier, vol. 143(C), pages 125-141.

    More about this item

    Keywords

    economic experiments; dynamic externalities; inter-generational games; climate change;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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