Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 16/2012: Cooperation Is Relative: Income and Framing Effects with Public Goods
Kjell Arne Brekke (), James Konow () and Karine Nyborg ()
Additional contact information
Kjell Arne Brekke: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
James Konow: Department of Economics, Loyola Marymount University,, Postal: Department of Economics, Loyola Marymount University , One LMU Drive, Suite 4200 , Los Angeles , CA 90045-2659 , USA
Karine Nyborg: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Abstract: In social dilemmas, there is tension between cooperation that promotes the common good and the pursuit of individual interests. International climate change negotiations provide one example: although abatement costs are borne by individual countries, the benefits are shared globally. We study a multi-period, threshold public goods game with unequally endowed participants and communication in which the decision variable is framed in three seemingly inconsequential ways: as absolute contributions, contributions relative to endowments and in terms of the effects of contributions on final payoffs. We find considerable agreement that “rich” (or high endowed) persons contribute more than “poor” (or low endowed) individuals at levels that are invariant across frames. Frames do, however, significantly affect both preferred and actual contributions for the poor: they contribute significantly less when the decision variable makes the effects on final payoffs salient than when it is framed in terms of absolute contributions. Contributions are explained mostly by self-interest, justice preferences, and experiencing failed negotiations, but we find no effects of reciprocity toward individuals or of the suggestions of others about what one should contribute.
Keywords: Public good game; threshold; communication; fairness; endowment heterogeneity
42 pages, May 21, 2012
Full text files
Memo-16-2012.pdf
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