Environmental awareness: The case of climate change

The extent of provision of a public good often relies on social awareness and public support for it. This applies, in particular, to global reduction of greenhouse gases and its relevance for mitigating climate change. We examine the concept of “public awareness” by introducing a formal model that analyzes efforts to mitigate climate change in a setting with heterogeneous countries. In the theoretical part we examine the Nash equilibrium of the contribution game. The effects of awareness and economic parameters on mitigation efforts can be disentangled, raising the possibility of linking awareness of climate change with economic wealth. The second part provides some empirical observations and offers the rankings of countries regarding awareness for climate change, as well as an empirical relationship between awareness and economic wealth.

Group size and collective action in a binary contribution game

We consider how group size affects the private provision of a public good with non-refundable binary contributions. A fixed amount of the good is provided if and only if the number of contributors reaches an exogenous threshold. The threshold, the group size, and the identical, non-refundable cost of contributing to the public good are common knowledge. Our focus is on the case in which the threshold is larger than one, so that teamwork is required to produce the public good. We show that both expected payoffs and the probability that the public good is obtained in the best symmetric equilibrium are decreasing in group size. We also characterize the limit outcome when group size converges to infinity and provide precise conditions under which the expected number of contributors is decreasing or increasing in group size for sufficiently large groups.JEL classificationC72, D71, H41.

Noncooperative Dynamic Contribution to a Public Project

We consider a dynamic contribution game in which a group of agents collaborates to complete a public project. The agents exert efforts over time and get rewarded upon completion of the project, once the cumulative effort has reached a pre-specified level. We explicitly derive the cooperative solution and a noncooperative Markov-perfect Nash equilibrium. We characterize the set of socially efficient projects, i.e., projects that cooperative groups find worth completing. Comparing with the Markov-perfect Nash equilibrium, we find that noncooperative groups give up large socially efficient projects. Moreover, they take too much time to complete the projects that they undertake.

Does Social Trust Affect Public Support for International Trade? Insights from an Experiment in Vietnam

In view of recent political backlash against various trade agreements, we are interested in understanding how social trust influences public opinion on international trade. Recent correlational studies suggest that such an effect might exist, but further research is needed to establish whether social trust does indeed play a causal role in shaping the mass public’s trade attitudes. We use an experimental approach to assess whether higher levels of social trust lead to more public support for free trade. To induce variation in levels of social trust, we expose study participants to different versions of a voluntary contribution game and examine the effect of such variation on trade preferences. The experiment was carried out in Vietnam, whose economy has experienced a rapid process of trade liberalization. We show that our treatment design effectively induces differing levels of social trust, with higher levels of social trust generating greater support for free trade.