Bad, for the greater (public) good: Third-party monitoring and sanction on pro-environmental behavior

Abstract : It is well recognized that incentives can influence the cooperation of individuals in providing public goods. The aim of this study is to experimentally adapt a Public Good Game (PGG) to the environmental issue of waste management. We report an experiment in which players have to cooperate in order to reduce the cost of waste sorting treatment. Bisides the traditional PGG, a third-party player (Advisor) is introduced in each group in the incentivized treatments. The third party has the possibility to provide a recommendation on the desirable individual contribution (Treatment 1), or collectively punish the non-cooperative behaviors by increasing the tax rate (Treatment 2). Furthermore, participants perform an effort task to increase their given initial endowments, and a measure of social preferences through a Social Value Orientation test (SVO). We find that both the advice and the threat of sanction increase significantly the average level of individual contributions. However, we see that once the sanction is applied, it ha no significant effect in increasing cooperation, but on the contrary decreased it. Moreover, we find in line results on altruism hypothesis that high income individuals contribute more in absolute value compared to low income ones Becker (1974).