Cooperative choice and its framing effect under threshold uncertainty in a provision point mechanism

Koji Kotani, Kenta Tanaka, Shunsuke Managi

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

This paper explores how threshold uncertainty affects cooperative behaviors in the provision of public goods and the prevention of public bads. The following facts motivate our study. First, environmental (resource) problems are either framed as public bads prevention or public goods provision. Second, the occurrence of these problems is characterized by thresholds that are interchangeably represented as “nonconvexity,” “bifurcation,” “bi-stability,” or “catastrophes.” Third, the threshold location is mostly unknown. We employ a provision point mechanism with threshold uncertainty and analyze the responses of cooperative behaviors to uncertainty and to the framing for each type of social preferences categorized by a value orientation test. We find that aggregate framing effects are negligible, although the response to the frame is the opposite depending on the type of social preferences. “Cooperative” subjects become more cooperative in negative frames than in positive frames, whereas “individualistic” subjects are less cooperative in negative frames than in positive ones. This finding implies that the insignificance of aggregate framing effects arises from behavioral asymmetry. We also find that the percentage of cooperative choices non-monotonically varies with the degree of threshold uncertainty, irrespective of framing and value orientation. Specifically, the degree of cooperation is highest at intermediate levels of threshold uncertainty and decreases as the uncertainty becomes sufficiently large.

Original languageEnglish
Pages (from-to)329-353
Number of pages25
JournalEconomics of Governance
Volume15
Issue number4
DOIs
Publication statusPublished - 2014 Oct 7

Keywords

  • Cooperative choice
  • Framing effects
  • Provision point mechanism
  • Threshold uncertainty

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)

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