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Environmental context and termination uncertainty in games with a dynamic public bad

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  • Pevnitskaya, Svetlana
  • Ryvkin, Dmitry

Abstract

We employ a laboratory experiment to investigate the effects of environmental context and termination uncertainty on decisions in a dynamic game with a public bad. Every period the subjects decide on their own production level that generates private revenue and ‘emissions’. Emissions accumulate over time and act as a public bad. We characterize and use as benchmarks the Markov perfect equilibrium and social optimum and find that observed decisions are between the two predictions. We find no significant effect of termination uncertainty on decisions in any except the last few rounds where, in a fixed-end setting, subjects allocate their entire endowment to production. We find a strong effect of environmental context which partially substitutes for experience. The effect of experience is most pronounced in the fixed-end treatment where production allocations and the level of the public bad become lower after the restart.

Suggested Citation

  • Pevnitskaya, Svetlana & Ryvkin, Dmitry, 2013. "Environmental context and termination uncertainty in games with a dynamic public bad," Environment and Development Economics, Cambridge University Press, vol. 18(1), pages 27-49, February.
    • Handle: RePEc:cup:endeec:v:18:y:2013:i:01:p:27-49_00
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    Cited by:

    1. Raja Rajendra Timilsina & Yoshinori Nakagawa & Yoshio Komijo & Koji Kotani & Tatsuyoshi Saijo, 2021. "Imaginary future generations: A deliberative approach for intergenerational sustainability dilemma," Working Papers SDES-2021-12, Kochi University of Technology, School of Economics and Management, revised Nov 2021.
    2. Gerlagh, Reyer & van der Heijden, Eline, 2015. "Going Green : Framing Effects in a Dynamic Coordination Game," Other publications TiSEM c3b6b46c-0fb0-4098-8251-d, Tilburg University, School of Economics and Management.
    3. Reyer Gerlagh & Eline van der Heijden, 2015. "Going Green: Framing Effects in a Dynamic Coordination Game," CESifo Working Paper Series 5618, CESifo.
    4. Calzolari, Giacomo & Casari, Marco & Ghidoni, Riccardo, 2018. "Carbon is forever: A climate change experiment on cooperation," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 169-184.
    5. Katerina Sherstyuk & Nori Tarui & Majah-Leah V. Ravago & Tatsuyoshi Saijo, 2016. "Intergenerational Games with Dynamic Externalities and Climate Change Experiments," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 247-281.
    6. Marco Battaglini & Salvatore Nunnari & Thomas R. Palfrey, 2016. "The Dynamic Free Rider Problem: A Laboratory Study," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 268-308, November.
    7. Ghidoni, Riccardo & Calzolari, Giacomo & Casari, Marco, 2017. "Climate change: Behavioral responses from extreme events and delayed damages," Energy Economics, Elsevier, vol. 68(S1), pages 103-115.
    8. Gerlagh, Reyer & van der Heijden, Eline, 2024. "Going green: Framing effects in a dynamic coordination game," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    9. Marie Ferré & Stefanie Engel & Elisabeth Gsottbauer, 2023. "External validity of economic experiments on Agri‐environmental scheme design," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 661-685, September.
    10. Alekseev, Aleksandr & Charness, Gary & Gneezy, Uri, 2017. "Experimental methods: When and why contextual instructions are important," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 48-59.
    11. 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.
    12. Persichina, Marco, 2016. "Cascading Defections from Cooperation Triggered by Present-Biased Behaviors in the Commons," MPRA Paper 83131, University Library of Munich, Germany, revised 30 Nov 2017.
    13. 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).
    14. Pevnitskaya, Svetlana & Ryvkin, Dmitry, 2022. "The effect of access to clean technology on pollution reduction: An experiment," Games and Economic Behavior, Elsevier, vol. 136(C), pages 117-141.
    15. Buckley, Penelope & Llerena, Daniel, 2022. "Nudges and peak pricing: A common pool resource energy conservation experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).
    16. Vittorio Pelligra & Alejandra Vásquez, 2020. "Empathy and socially responsible consumption: an experiment with the vote-with-the-wallet game," Theory and Decision, Springer, vol. 89(4), pages 383-422, November.
    17. Penelope Buckley & Daniel Llerena, 2022. "Nudges and peak pricing: A common pool resource energy conservation experiment," Post-Print hal-03765755, HAL.
    18. Mielke, Jahel & Steudle, Gesine A., 2018. "Green Investment and Coordination Failure: An Investors' Perspective," Ecological Economics, Elsevier, vol. 150(C), pages 88-95.
    19. Maria Eduarda Fernandes & Marieta Valente, 2018. "When Is Green Too Rosy? Evidence from a Laboratory Market Experiment on Green Goods and Externalities," Games, MDPI, vol. 9(3), pages 1-18, September.
    20. Persichina, Marco, 2016. "Other-regarding Preferences and Social Norms in the Intergenerational Transfer of Renewable Resources when Agent has Present-Biased Preferences," MPRA Paper 84277, University Library of Munich, Germany, revised 30 Nov 2017.

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