Freytag, Andreas Güth, Werner Koppel, Hannes Wangler, Leo
Year of Publication:
Jena economic research papers 2010,086
Viewing individual contributions as investments in emission reduction we rely on the familiar linear public goods-game to set global reduction targets which, if missed, imply that all payoffs are destroyed with a certain probability. Regulation by milestones does not only impose a final reduction target but also intermediate ones. In our leading example the regulating agency is Mother Nature but our analysis can, of course, be applied to other regulating agencies as well. We are mainly testing for milestone effects by varying the size of milestones in addition to changing the marginal productivity of individual contributions and the probability to lose.
cumulative public goods milestones climate change experiment