Cooperation and Prosocial Behavior – Essays in Behavioral and Environmental Economics

Abstract

This thesis comprises an introductory chapter followed by four distinct but connected articles. The common thread of this dissertation is twofold: First, the common methodological framework of this dissertation builds on the use of economic experiments. Second, the four chapters are connected thematically as they all investigate collective action problems w.r.t. cooperation or prosociality and how decision-making in such situations is impacted by institutional factors. While Chapter 2 looks at cooperation and the influence of social norms in a field setting, Chapter 3 and 4 present cooperation dilemma where individuals face inequality. Lastly, Chapter 5 also studies social norms in prosocial decision-making, yet in a slightly different setting of charitable giving. Chapter 2 examines the willingness to contribute to inter-community climate funds in a lab-in-the-field experiment in Bougainville, Papua New Guinea. Specifically, in a 2 x 2 between-subject design individuals decide whether to contribute to a climate adaptation effort that would protect them from a potential natural disaster. The treatments vary i) the identity of the other player (in-group vs. out-group) and ii) whether or not the player is observed by a local village authority while taking the decision. The results are threefold: First, I observe lower contribution levels when individuals interact with out-group members. Second, observation shows to have a positive effect on contribution levels. Lastly, the out-group discrimination disappears when interacting with observation, i.e. being observed by a village authority increases contribution levels in the out-group setting. Chapter 3 investigates the role of cost uncertainty in a ‘pledge and review’ setting as known from the Paris Agreement. In an online laboratory experiment, participants are first asked to state a non-binding pledge before entering five contribution rounds. The treatments vary i) when contribution costs are being revealed (before or after the pledge making), ii) whether or not players are subject to a review process in which they provide approval/disapproval points to each others’ pledges and contribution levels, and ii) whether they have homogeneous or heterogeneous endowments. The results show that whenever costs are uncertain and reviews are absent, people make rather conservative pledges. A review process increases pledge levels, but does not necessarily improve later cooperation. When costs are initially uncertain, benefits only accrue in homogeneous groups, but not when high and low cost players interact. Chapter 4 deals with spatial allocations of rich and poor in a network linear public goods setting. In an in-person laboratory experiment, we investigate individuals’ contribution and redistribution behavior depending on whether i) they are in a closed or overlapping neighborhood, ii) they act as a homogeneous or heterogeneous group and in the latter case whether iii) the spatial allocation - clustered (poor, poor, poor, rich, rich, rich) vs. alternating (poor, rich, poor, rich, poor, rich) - matters. We find that participants do invest in others’ locations, yet mainly in a way in which they themselves benefit. For clustered networks, we observe that rich players located at the border trigger most of the redistribution to the poor cluster. Lastly, we observe that participants are motivated by reciprocity as they reduce (increase) investments and thereby punish (reward) neighbors who contributed less (more). Chapter 5 examines the use of indirect signals in the context of charitable giving. We investigate how individuals respond to different levels of observability when they decide (i) how much to donate to charity, and (ii) what charities to donate to. We mimic charitable giving in the field by making it costly to spread donations among many charities. We find that donors respond to transaction costs by reducing the number of charities they give to. However, when donors are observed and evaluated based solely on the number of charities they give to, they (correctly) anticipate that spectators will infer larger donations from more charities. Some donors use this strategically by making numerous small donations, whereby they indirectly signal that they are altruistic. Yet, this costly “altruistic bluff” disappears once spectators also observe the amounts donated to each charity.