Conference Agenda

Paying higher taxes that finance public goods might be less lucrative if high-quality private alternatives are available. Inspired by the trend that an increasing amount of traditional public goods such as disaster protection, education, or security, become privatized, this paper investigates the willingness to finance inclusive public goods when exclusive alternatives become accessible for part of the group. In a private-public goods game, participants vote for a tax rate with which they intend to finance the inclusive public good, and subsequently choose if they want to acquire the exclusive private substitute. In a between-subject design, we vary i) the price of the private alternative, and ii) whether participants play in heterogeneous or homogeneous groups. As theoretically predicted, we find that as the cost of being self-reliant (private good) decreases, the average tax rate selected by groups falls. Surprisingly, we find a substantial share of rich players voting for high tax rates despite opting the private good. This partly leads to inequality increasing less in heterogeneous groups when decreasing the costs of the private alternative.

Global collective action by sovereign and heterogeneous actors is crucial to limit global warming and avoid dangerous climate change. We study how the willingness of heterogeneous agents to join a coalition to provide a public good depends on how the costs are shared within the coalition and how this decision is made. The decision to share the burden within the coalition is either made democratically or it is imposed exogenously. Burden sharing rules can range from equal contributions for all members, regardless of their endowments, to fully proportional to agents’ endowments. We investigate the effectiveness of the different procedural approaches by combing theoretical considerations with causal evidence from a highly controlled laboratory experiment. We find that the option to democratically decide on the burden sharing rule has an impact on the participation decision. Grand coalitions are more likely to be formed when the burden sharing decision is made democratically. In addition, our results show that additional individual contributions are driven by the distributional dimension of the coalition, both for members and for non-members of the coalition. Regarding altruistic behavior, we find that participants are motivated by warm-glow motives rather than by pure altruism.

We analyze a threshold public goods game in which players have varying preferences for public goods provision, motivated by the challenges of coordinating climate change mitigation efforts in the presence of asymmetries among involved agents. The setup chosen specifically allows for an analysis of the trade-off between efficiency and equity. We choose a preference specification allowing for a variety of other-regarding preferences and hypothesize that benefit symmetry among players facilitates coordination due to converging focal points of efficiency and equity. Increasing degrees of asymmetry lead to diverging focal points, rendering cooperation more difficult. Our theoretical predictions are supported by preliminary experimental evidence. We find that provision is most frequent when players are symmetric. An increase in the degree of asymmetry does not significantly hamper provision success, suggesting that the extent of asymmetry is not salient. However, in unsuccessful groups, total contributions decline as player heterogeneity increases. Our experimental treatment allows us to disentangle the role of efficiency concerns in these patterns. Furthermore, we investigate how different social preference types shape these contribution dynamics.

There is growing concern over the link between international trade in coffee, cocoa, and oilseed markets and the rate of tropical rainforest deforestation in developing countries. In this paper, we consider the potential role of fair pricing agreements commonly employed for these farm products in causing excess farm supply conditions that increase the market pressure foragricultural land development. We demonstrate that a fair pricing standard has the effect of decoupling farm supply from the retailer's optimization problem, resulting in retail prices that maximize sales revenue in the downstream consumer market. We show this disconnect between revenue and cost in downstream retail markets can cause agricultural products to be oversupplied in upstream farm product markets, even for small increments in price fairness to farmers. We design an experiment to test the implications of fair pricing agreements for market behavior, and find that fair pricing agreements, when accepted, generate a significant increase in excess supply.