Cooperative Choice and its Framing Effect Under Threshold Uncertainty in a Provision Point Mechanism

29 Pages Posted: 26 May 2010

See all articles by Koji Kotani

Koji Kotani

International University of Japan - Graduate School of International Relations

Kenta Tanaka

Faculty of Economics; Tohoku University

Shunsuke Managi

Kyushu University

Date Written: May 26, 2010

Abstract

This paper examines how threshold uncertainty affects cooperative behaviors in each of public goods provision and public bads prevention. The intent is mainly motivated by the following facts. First, resource and environmental problems can be either framed as public bads prevention or public goods provision. Second, the occurrence of these problems is characterized by the existence of thresholds which is interchangeably represented by “nonconvexity”, “bifurcation”, “bi-stability”, or “catastrophes”. Third, the location of such a threshold is mostly unknown to us. For our purpose, we employ a provision point mechanism with threshold uncertainty, and analyze the response of cooperative behaviors to uncertainty and to the framing in each type of social preferences categorized by a value orientation test. First, we find aggregate framing effects are identified to be negligible, though response to the frame is opposite depending on the type of social preference in each subject. “Cooperative” subjects cooperate less, whereas “indivisualistic” subjects cooperate more in a public goods setting. This implies that insignificance of the aggregate framing effect arises from the behavioral asymmetry. Second, we find the percentage of cooperative choices non-monotonically varies with the degree of threshold uncertainty, irrespective of framing and value orientation. More specifically, the degree of cooperation is highest in the intermediate level of threshold uncertainty, whereas it sharply drops as the uncertainty becomes sufficiently large.

Keywords: Cooperative choice, Framing effects, Threshold uncertainty, Provision point mechanism

JEL Classification: H41, D03

Suggested Citation

Kotani, Koji and Tanaka, Kenta and Tanaka, Kenta and Managi, Shunsuke, Cooperative Choice and its Framing Effect Under Threshold Uncertainty in a Provision Point Mechanism (May 26, 2010). Available at SSRN: https://ssrn.com/abstract=1616065 or http://dx.doi.org/10.2139/ssrn.1616065

Koji Kotani

International University of Japan - Graduate School of International Relations ( email )

777 Kokusai-Cho
Minami Uonuma Shi, Niigata-ken 949-7277
Japan

Kenta Tanaka

Tohoku University ( email )

Aoba-ku, Sendai, 980-8577
Japan

Faculty of Economics ( email )

1-26-1 Toyotama-kami
Nerima-ku
Tokyo 176
Japan

Shunsuke Managi (Contact Author)

Kyushu University ( email )

Fukuoka, Fukuoka
Japan

HOME PAGE: http://www.managi-lab.com/english.html

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