Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 7/2019: No Man is an Island - Social coordination and the Environment

Karine Nyborg ()
Additional contact information
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: Humans are fundamentally social. Social activities require coordination, which may yield multiple equilibria in the form of stable, self-reinforcing patterns of herd behavior. Since environmental impacts can differ substantially between alternative equilibria, such self-reinforcing behaviors may, from an environmental perspective, be viewed as representing virtuous or vicious cycles. Environmental policies can help break the self-fulfilling expectations of vicious cycles, tipping the economy to more environment-friendly equilibria.

Keywords: Environmental policy; multiple equilibria; social interaction; tipping points

JEL-codes: D10; D62; D91; Q01; Q50; Q58

23 pages, June 17, 2019

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