Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2018-03-07
Number: 18-019/I
Author-Name: Manuel Foerster
Author-Email: manuel.foerster@wiso.uni-hamburg.de
Author-Workplace-Name: University of Hamburg
Author-Name: Joel (J.J.) van der Weele
Author-Email: vdweele@uva.nl
Author-Workplace-Name: Universiteit van Amsterdam
Title: Denial and Alarmism in Collective Action Problems
Abstract: We analyze communication about the social returns to investment in a public good. We model two agents who have private information about these returns as well as their own taste for cooperation, or social preferences. Before deciding to contribute or not, each agent submits an unverifiable report about the returns to the other agent. We show that even if the public good benefits both agents, there are incentives to misrepresent information. First, others’ willingness to cooperate generates an incentive for “alarmism”, the exaggeration of social returns in order to opportunistically induce more investment. Second, if people also want to be perceived as cooperators, a “justification motive” arises for low contributors. As a result, equilibrium communication features “denial” about the returns, depressing contributions. We illustrate the model in the context of institutional inertia and the climate change debate.
Classification-JEL: C72, D64, D82, D83, D91
Keywords: cheap talk, cooperation, image concerns, information aggregation, public goods
File-Url: https://papers.tinbergen.nl/18019.pdf
File-Format: application/pdf
File-Size: 575589 bytes
Handle: RePEc:tin:wpaper:20180019