Date created: | Last Updated:

Category: Project

Description: This project studies group cooperation in experimental interactions reproducing the incentives and costs that individuals face in the context of climate change. Each individual participating in the study can invest private resources to reduce the probability of major losses in their wealth in the future. Since individual investment produce positive externalities to others, rational self-interested individuals will prefer to transfer the costs of investment on others, creating the well-known result of a "tragedy of the commons". Our experimental methodology enables us to compare cooperative outcomes when interaction takes places nationally vis-à-vis internationally, to causally estimate the impact of a sanctioning mechanism whereby interacting agents can inflict costs on others, and to isolate the effect of revealing the nationality of the interacting partners. Our study involves participants from two countries, Germany and Russia, where attitudes to cooperation and the impact of endogenous sanctions have been found to be significantly different in previous research. Our main result is that the combination of international interaction and of endogenous sanctioning institutions makes it possible to reduce the probability of catastrophic wealth losses in situations of collective risk, in comparison to national interactions. The reason for this result is that in international interaction backed by sanctions low cooperators in national interaction - mainly Russian participants - converge to the cooperation levels of high cooperators – mainly German participants. This evidence suggests that using sanctions to support international climate change agreements, as advocated by theoretical analyses on climate change, may be effective because such agreements would have psychological cogency in the population.