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Do Equity Preferences Matter in Climate Negotiations? An Experimental Investigation

Author

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  • Dannenberg, Astrid
  • Sturm, Bodo
  • Vogt, Carsten

Abstract

This paper investigates in how far equity preferences may matter for climate negotiations. For this purposes we conducted a simple experiment with people who have been involved in international climate policy. The experiment, which was run via the Internet, consisted of two simple non-strategic games suited to measure the parameters of inequity aversion in a Fehr and Schmidt (1999) utility function. We find that our participants show aversion against advantageous as well as disadvantageous inequity to a considerable amount. Moreover, the degree of inequity aversion is higher compared to that of students in the similar study of Dannenberg et al. (2007). Regarding the geographical variety in our sample, we cannot confirm significant differences in the degree of inequity aversion between different regions in the world, which is in line with previous findings from the experimental literature. This finding lends support to the hypothesis that equity preferences are "hard-wired" and not much influenced by socio-economic or cultural circumstances.

Suggested Citation

  • Dannenberg, Astrid & Sturm, Bodo & Vogt, Carsten, 2007. "Do Equity Preferences Matter in Climate Negotiations? An Experimental Investigation," ZEW Discussion Papers 07-063, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:6801
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    File URL: https://www.econstor.eu/bitstream/10419/24646/1/dp07063.pdf
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    References listed on IDEAS

    as
    1. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
    2. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    3. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
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    More about this item

    Keywords

    individual preferences; inequity aversion; climate policy; experimental economics; public goods;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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