Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/177709
Authors: 
Förster, Manuel
van der Weele, Joël J.
Year of Publication: 
2018
Series/Report no.: 
Tinbergen Institute Discussion Paper TI 2018-019/I
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.
Subjects: 
cheap talk
cooperation
image concerns
information aggregation
public goods
JEL: 
C72
D64
D82
D83
D91
Document Type: 
Working Paper
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