nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2023‒11‒13
two papers chosen by
Marco Novarese, Università degli Studi del Piemonte Orientale

  1. Climate Change Risk, and Human Behavior: Theory and Evidence By Sanjit Dhami; Narges Hajimoladarvish; Pavan Mamidi
  2. Using Milestones as a Source of Feedback in Teamwork: Insights from a Dynamic Voluntary Contribution Mechanism By Nisvan Erkal; Boon Han Koh; Nguyen Lam

  1. By: Sanjit Dhami; Narges Hajimoladarvish; Pavan Mamidi
    Abstract: A group of decision makers simultaneously make contributions towards a green fund that reduces the future probability of a climate catastrophe. We derive the theoretical predictions of the effects on contributions arising from ‘behavioral parameters’ such as loss aversion and present-bias; ‘structural factors’ such as variation in the timing of uncertainty; the ‘demand for a commitment device’; and ‘institutional factors’ such as comparing voluntary contributions with mandatory tax financed contributions. We then run experiments to stringently, test our predictions. Loss aversion and present-bias reduce contributions; there is demand for the commitment technology; and voluntary contributions are higher relative to mandatory tax-financed contributions.
    Keywords: climate risk abatement, loss aversion, present-biased preferences, voluntary versus mandatory contribution mechanisms, commitment technology
    JEL: C92 D01 D02 D91
    Date: 2023
  2. By: Nisvan Erkal (Department of Economics, University of Melbourne); Boon Han Koh (Department of Economics, University of Exeter); Nguyen Lam (Department of Economics, University of Melbourne)
    Abstract: Many economic activities rely on teamwork where groups of individuals work together for a common goal by pooling their resources or skills. However, cooperation within teams can be challenging due to the social dilemma problem which arises when individual incentives interfere with operational effectiveness. We study teamwork in a dynamic public goods game setting where individuals make multiple contribution decisions to a team project and face strategic uncertainty about the behavior of their team members. We examine whether providing feedback about the team’s progress at regular intervals (time-based feedback) or based on the achievement of milestones (milestone-based feedback) is more beneficial for increasing aggregate contributions. Our results reveal that providing milestone-based feedback leads to a significant increase in aggregate team contributions as compared to time-based feedback. This impact is largely driven by conditional cooperators. Findings from a follow-up experiment reveal evidence of a goal effect, a signaling effect, and an information effect arising from the use of milestones on the behavior of conditional cooperators.
    Keywords: teamwork, public good provision, milestones, feedback, voluntary contribution mechanism
    JEL: C92 D83 D91 H41
    Date: 2023–09–12

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