Social Comparisons and the Environment: Essays on the Effects of Conformity, Guilt Aversion and Surprise Seeking

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Malte Martin

Social Comparisons and the Environment:

Essays on the Effects of Conformity, Guilt Aversion and Surprise Seeking

Dissertation

Fakultät für

Wirtschafts-

wissenschaft

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Social Comparisons and the Environment:

Essays on the Effects of Conformity, Guilt Aversion and Surprise Seeking

Inauguraldissertation

zur Erlangung des akademischen Grades des Doktors der Wirtschaftwissenschaft (Dr. rer. pol.) der Fakult¨at f¨ ur

Wirtschaftswissenschaft der FernUniversit¨at in Hagen

vorgelegt von

Diplom-Volkswirt Malte Martin aus Dortmund

Hamm, den 12. Dezember 2019

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Tag der Disputation: 11.11.2020

Zweitgutachter Prof. Dr. Joachim Grosser Erstgutachter: Prof. Dr. Alfred Endres

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Acknowledgements

Completing this project would not have been possible without the support of a lot of people I am indebted to.

First, I would like to thank the supervisor of my thesis, Prof. Dr. Alfred Endres, for giving me the chance to work at his chair and to learn how academic research is done. My work has greatly benefited from his general advice and his always encouraging feedback on the essays contained in this thesis.

Second, I would like to give thanks to the other supervisors of my thesis, Prof. Dr. Joachim Grosser and Prof. Dr. Robert Schmidt.

I thank my former colleagues Bianca Rundshagen, Frederik Schaff and Sven H¨ofer for their comments on my thesis and all the valuable discussions about economics and life in general.

Further, I would like to say thank you to all student assistants for their support during our time together at the FernUniversit¨at in Hagen. In particular, I want to include Daniel Limpinsel, who also made travelling home after work less boring and long.

I am also thankful to Annette vom Heede for always contributing to an inspiring working atmosphere and many great conversations.

I am grateful to my family and friends, who always believed in me, and especially to my parents Monika and Werner for their support and encour- agement during the whole project.

Finally, I am deeply grateful to my wife Kimberly for her unconditional love, her warmth and her support. I dedicate this work to you.

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Our selective review of the literature in behavioral environmental and behavioral economics lays a major focus on experimental studies in order to illustrate the relevance of non-standard behavior for the environment. Fur- ther, it includes an overview about different types of social preferences and discusses how these are modeled theoretically. The first theoretical study analyzes stylized static and dynamic models with negative external effects.

Agents can be influenced by conformity preferences, guilt aversion or surprise seeking. In the second one, we discuss the influence of conformity preferences and norms on the optimal design of payments for ecosystem services contracts. In the third, we analyze the impact of guilt aversion and surprise seeking on the stability of international environmental agreements.¹

The thesis is motivated by the extensive literature in behavioral and experimental economics which shows that human behavior cannot be explained by the standard model in economics alone, which assumes that agents are motivated only by self-interest and make decisions rationally (Thaler, 2016).

Further and as we will argue in the second chapter of this thesis, the collected evidence from experiments conducted in laboratories and in the field shows that the deviations from the predictions of the standard model are often systematic. This enables researchers to develop behavioral theories with social preferences and norms that can explain the experimental findings better than the standard model and hence can improve predictions (Bolton and Ocken- fels, 2012; Camerer, 2014). Nevertheless, as Dasgupta et al. (2016) note, the neoclassical assumptions of self-interest and rationality still form the basis of the standard model and dominate environmental economics, which indicates the still existing lack of research in this area.

In the theoretical models in this thesis, we stick to the rationality assumption of the standard model. But instead of assuming purely self-interested behavior, we consider the relevance of social comparisons for environmental economics. The first social preference we consider is a desire to conform with

1The details of our approaches are illustrated in the overview at the end of this introduction.

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the actions of other agents. It will be assumed that deviating from the behavior of others causes psychological costs to an individual. Further, we will distinguish between conformity preferences and norms. While in models with conformity preferences the social norm is endogenously determined by the actions in the game, in models with conformity norms these are exogenously given, for example by previous behavior. The latter type is also called the direct social norm approach by Fehr and Schurtenberger (2018). While agents compare their behavior with the behavior of others in the conformity model, the models on guilt aversion and surprise seeking belong to the theoretical field of psychological game theory, where expectations directly enter the utility functions of the agents. Here the agents compare their actions with the expectations of others. We look into guilt aversion, where agents experience disutility when their actions fall below others’ expectations (Battigalli and Dufwenberg, 2007) and into surprise seeking, where agents obtain additional utility when they outperform others’ expectations (Khalmetski et al., 2015).

The choice to study these types of social preferences is motivated by the recent experimental literature which shows that behavior in environmental economics is influenced by the desire to conform with social norms, see An- dor and Fels (2018) for example.² As will be illustrated in the review, several types of social preferences exist that can influence behavior and are possible explanations for the desire to comply with social norms as Fehr and Schurten- berger (2018) argue. In our view the simplest and most direct explanation to norm compliance are conformity preferences. Experiments conducted in psychological and economic research show that people have a desire to conform. Two recent papers in economics by Bernheim and Exley (2015) and Charness et al. (2019) provide informative overviews and further evidence.

Thus, it is especially relevant to investigate how conformity preferences can influence decisions which are related to the environment. Jachimowicz et al.

(2018) show that the spread in effect sizes due to social norm marketing found in energy conservation research can be explained by second-order normative beliefs. People being guilt averse or surprise seeking might explain these findings.³ For example, both social preferences have been shown to be successful in explaining behavior in dictator and public goods games, eg. Khalmetski et al. (2015) or Dhami et al. (2019). Since laboratory experiments indicate

2We discuss the literature in more detail in our review in chapter 2.

3Nevertheless, other explanations are possible and cannot be excluded based on the state of knowledge.

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that people are affected by conformity preferences, guilt aversion and surprise seeking, and because field experiments in environmental economics show that social norms affect behavior in the field, we choose to study these preferences in more detail.

The goal of the chapters 2 and 3 is summarizing and deriving some basic principles of how social preferences and norms can influence behavior that is related to environmental issues. The theoretical model is motivated by the empirical evidence on social preferences and norms. The chapters 4 and 5 contain concrete applications of social preferences and norms and are motivated by the difficulty to solve two important environmental problems, namely loss in biodiversity and ecosystem services, and climate change.

The first application discusses the influence of conformity preferences and norms on the optimal design of payments for ecosystem service contracts. The loss of biodiversity and ecosystem services has been one of the central environmental issues faced by humanity today. Based on principal- agent-theory in economics, contracts with payments for the preservation of ecosystem services have been proposed as a possible solution to the problem.

Unfortunately, the evidence of this intervention is mixed and the optimal design of these contracts is debated in the literature from a theoretical and a practical point of view (Engel, 2016; B¨orner et al., 2017; Palm-Forster et al., 2019).

The second application is related to climate change. Climate change can economically be described as a tragedy of the commons or as a public goods problem, since the efforts of a country to reduce emissions of climate gases also causes benefits to other countries, while the country has to carry the costs of its efforts alone. Theoretically, the idea of climate coalitions has been proposed in order to reduce the unwanted free-riding incentives. Several game-theoretic models with purely-self interested and behavioral countries have been discussed in order to find a possible solution to the problem. Since the standard model of international climate negotiations predicts only small sized coalitions, see e.g. Marrouch and Chaudhuri (2016), several researchers like Nyborg (2018) investigate possible effects of social preferences.

As illustrated above, this thesis deals with topics in behavioral environmental economics. All chapters discuss effects of social preferences and norms on environmental problems. Out of the many types we focus on are conformity preferences and norms, guilt aversion and surprise seeking.

In chapter 2 empirical and theoretical literature from psychology and economics is considered that shows how social preferences and norms influ-

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ence behavior when decisions are relevant for the environment. To do so, we provide a selective literature review of relevant experimental research in economics and environmental economics which shows that people do not always behave as the standard model in economics predicts. Further, we present influential models of social preferences that can explain such experimental results better than the standard model and discuss gaps in research.

Chapter 3 studies the effects of conformity preferences, guilt aversion and surprise seeking on the internalization of negative external effects in a highly stylized setting that has previously been used in G¨urtler and G¨urtler (2012) to study inequality aversion. Using this stylized setting enables us to compare the effects of different social preferences and to uncover some general principles as to when social preferences can affect behavior and thus are relevant for environmental economics. Concerning general principles, we study static and dynamic models and show that heterogeneity in agent types is not a necessary condition for social preferences to affect behavior.

Chapter 4 looks at an application of conformity preferences and analyzes how landowners’ desires to conform with the land retirement of their peers can effect the optimal design of a payments for ecosystem services contract.

We consider a basic adverse selection problem with symmetric and asymmet- ric information concerning individual private norms to conserve ecosystem service through land retirement. We build on the existing literature and ex- tend the model from Choi et al. (2018) to an infinite type space, discuss the important differences between conformity preferences and a desire to comply with an external norm, and analyze heterogeneity in desires to conform when agents are otherwise symmetric.

In chapter 5 we analyze the effects of guilt aversion and surprise seeking on the stability of international climate agreements. To do so, we assume that countries or their decision makers are influenced by the expectations of the general public. Since they cannot observe the public’s expectations directly, we assume that countries hold second-order beliefs about the expectations and act accordingly. In psychological game theory beliefs directly enter the objective function of the agents, while in standard game theory they do not. Thus, when countries are guilt averse, they experience guilt whenever they fall short of their second-order beliefs and obtain utility from surprise when they outperform expectations. Our analysis of climate negotiations is based on the fundamental models of Hoel (1992), Carraro and Siniscalco (1993) and Barrett (1994). While in the standard models the countries only maximize social welfare, in our model the countries can be guilt averse and/

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or surprise seeking. The model consists of two stages. In the first stage the countries decide whether they want to join the coalition. In the second stage the coalition and the non-members simultaneously choose their optimal emissions. In a first step, we analyze the behavior of countries when they are purely guilt averse or purely surprise seeking. In a second step, we analyze the complete model with guilt aversion and surprise seeking for homogeneous and heterogeneous countries.

In chapter 6 we conclude and provide a comprehensive discussion of the results obtained in this thesis.

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References

Andor, M. A. and Fels, K. M. (2018), ‘Behavioral economics and energy conservation – a systematic review of non-price interventions and their causal effects’,Ecological Economics 148, 178–210.

Barrett, S. (1994), ‘Self-enforcing international environmental agreements’, Oxford Economic Papers46, 878–894.

Battigalli, P. and Dufwenberg, M. (2007), ‘Guilt in games’, American Eco- nomic Review 97(2), 170–176.

Bernheim, B. D. and Exley, C. L. (2015), ‘Understanding conformity: An experimental investigation’,Harvard Business School NOM Unit Working Paper (16-070).

Bolton, G. E. and Ockenfels, A. (2012), ‘Behavioral economic engineering’, Journal of Economic Psychology 33(3), 665–676.

B¨orner, J., Baylis, K., Corbera, E., Ezzine-de Blas, D., Honey-Ros´es, J., Persson, U. M. and Wunder, S. (2017), ‘The effectiveness of payments for environmental services’,World Development96, 359–374.

Camerer, C. F. (2014), ‘Behavioral economics’, Current Biology 24(18), R867–R871.

Carraro, C. and Siniscalco, D. (1993), ‘Strategies for the international pro- tection of the environment’,Journal of Public Economics52(3), 309–328.

Charness, G., Naef, M. and Sontuoso, A. (2019), ‘Opportunistic conformism’, Journal of Economic Theory180, 100–134.

Choi, K., Han, J. J. and Lee, S.-H. (2018), ‘Peer pressure with inequity aversion’,The Korean economic review 34(2), 131–155.

Dasgupta, P., Southerton, D., Ulph, A. and Ulph, D. (2016), ‘Consumer behaviour with environmental and social externalities: Implications for analysis and policy’, Environmental and Resource Economics65(1), 191–

226.

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Dhami, S., Wei, M. and al Nowaihi, A. (2019), ‘Public goods games and psychological utility: Theory and evidence’,Journal of Economic Behavior

& Organization167(1), 361–390.

Engel, S. (2016), ‘The devil in the detail: A practical guide on designing payments for environmental services’,International Review of Environmental and Resource Economics 9(1–2), 131–177.

Fehr, E. and Schurtenberger, I. (2018), ‘Normative foundations of human cooperation’,Nature Human Behaviour 2(7), 458–468.

G¨urtler, M. and G¨urtler, O. (2012), ‘Inequality aversion and externalities’, Journal of Economic Behavior & Organization84(1), 111–117.

Hoel, M. (1992), ‘International environment conventions: The case of uni- form reductions of emissions’, Environmental and Resource Economics 2(2), 141–159.

Jachimowicz, J. M., Hauser, O. P., O’Brien, J. D., Sherman, E. and Galin- sky, A. D. (2018), ‘The critical role of second-order normative beliefs in predicting energy conservation’,Nature Human Behaviour2(10), 757–764.

Khalmetski, K., Ockenfels, A. and Werner, P. (2015), ‘Surprising gifts: The- ory and laboratory evidence’, Journal of Economic Theory 159(A), 163–

208.

Marrouch, W. and Chaudhuri, A. R. (2016), ‘International environmental agreements: Doomed to fail or destined to succeed? A review of the literature’,International Review of Environmental and Resource Economics 9(3-4), 245–319.

Nyborg, K. (2018), ‘Social norms and the environment’, Annual Review of Resource Economics 10(1), 405–423.

Palm-Forster, L. H., Ferraro, P. J., Janusch, N., Vossler, C. A. and Messer, K. D. (2019), ‘Behavioral and experimental agri-environmental research:

Methodological challenges, literature gaps, and recommendations’, Envi- ronmental and Resource Economics 73(3), 719–742.

Thaler, R. H. (2016), ‘Behavioral economics: Past, present, and future’, American Economic Review 106(7), 1577–1600.

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2 Social Preferences and Norms in Environmental Economics

Abstract

In this chapter, we provide a review of the literature on behavioral economics and behavioral environmental economics in order to illustrate why social preferences and norms should be considered in environmental economics. To do so, we illustrate the importance of experimental research for modern behavioral economics and present relevant theoretical models of social preferences and norms. Further, we discuss important directions of experimental research and summarize the ongoing discussion of the generalizability of laboratory experiments. Finally, we analyze the previous literature to collect arguments for considering the effects of social preferences and norms in environmental research. Since the arguments for doing so are empirical in nature, we survey field experiments on social preferences and norms in environmental economics.

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2.1 Introduction

In this chapter, we look at selected works from the literature on behavioral and behavioral environmental economics. The goal of this review is to answer the following research question: Do social preferences and norms matter for environmental economics? As we will argue, the answer to this question must in the end be empirical, hence our major interest is in empirical and especially in experimental studies. In the first part we focus on conformity, guilt aversion and surprise seeking since these preferences can play an important role in explaining the findings on norm compliance in environmental economics, we discuss in the second part of this review. Further, we illustrate and discuss gaps of knowledge and suggest topics for future research.

Environmental economics is based on the standard model used in economic theory to analyze and describe human behavior (Dasgupta et al., 2016). The standard model assumes that agents are fully rational and solely self-interested. Thus, an agent’s decision problem is modeled by the maximization of his utility function for given preferences under exogenous restrictions. Research in behavioral economics deviates from these assumptions and analyzes agents that are boundedly rational, have bounded willpower or are not solely self-interested (Mullainathan and Thaler, 2000; Camerer, 2014).

Models with bounded rationality assume that cognitive abilities of humans are limited, so that agents often cannot maximize utility. This argument is usually referred back to Simon (1955), who also proposed satisficing as an alternative approach to the maximization model (Simon, 1956). In models with bounded willpower, agents’ actions deviate from their long-term goals. One well-known example for this type is the quasi-hyperbolic discount- ing model proposed by Laibson (1997), which describes an individual’s inter- temporal decisions. Finally, agents can be boundedly self-interested. This is the type of bias we are particularly interested in.¹ Agents analyzed in this field of research are said to have social or other-regarding preferences. Some models assume that people can be altruistic (Andreoni, 1990) or inequality averse concerning unequal distributions of payments (Fehr and Schmidt, 1999; Bolton and Ockenfels, 2000). Other models assume that agents can feel guilty when they do not meet the expectations of others (Battigalli and Dufwenberg, 2007). These are only examples of some influential models. In

1Deviations from the standard assumptions are often called biases in the economic literature.

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the subsequent section we provide a more detailed overview about different types of social preferences including the ones mentioned. Additionally, we take a look at the literature that analyzes agents who make moral decisions.

These can, for example, be utilitarian in the sense of including welfare maximization or Kantian by considering the categorical imperative. While other normative theories can also be relevant, we focus on these two important ones in order to illustrate the concept.

Modern behavioral economics does not rely on a theoretical critique of the standard model and being an alternative way to describe and analyze behavior alone. Primarily, it rests on experimental research in psychology and economics conducted in recent decades. For a long time the commonly held belief in the social sciences was that experiments can only be conducted in the natural sciences. This view has changed as Falk and Heckman (2009) note. Experimental research in economics has quickly grown since the mid 1980s. Laboratory experiments show that human behavior systematically deviates from the predictions of the standard model and that behavioral theories can predict these findings better.

This review proceeds as follows. In the first part of this chapter, we discuss behavioral economics with a special focus on social preferences and norms. We begin our review by taking a closer look at some fundamental principles of the field. Then we illustrate the most influential theories of social preferences and social norms, before we discuss experimental evidence. Since the evidence on social preferences and norms is vast, it is impossible to review the whole literature. Instead, we want to show that experimental results on social preferences from laboratory experiments and from experiments in general are relevant for markets that have an impact on the environment. To do so, we limit the review of the literature to the three important aspects for extending general experimental results to environmental economics. First, we ask whether social norms can be imported from ”the real world” into a lab experiment and influence subjects behavior. Secondly, we look at experiments that try to disentangle the predictions of different behavioral models, because in a lot of cases several behavioral theories can explain behavior observed in experiments. To illustrate the difficulty of dis- entangling behavioral explanations, we focus on experiments dealing with conformity and guilt aversion. We choose these two types of social preferences since these are highly relevant in the light of the recent experimental evidence in environmental economics as we will explain in the second part of this text. Thirdly, we look at the ongoing discussion about the general-

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izability of laboratory experiments, since we are interested in whether social preferences and norms are relevant for environmental economics. While the first two aspects are important to show that social preferences and norms are relevant for predicting behavior, the last one has to be discussed in order to justify extending experimental results to other fields of research.

In the second part of this chapter, we take a look at previously published review articles in order to collect arguments for including behavioral findings into environmental economic theory. Then, we focus on social norms and discuss how these can affect environmental economics. We take an extensive look at the experimental literature on the role of social norms in environmental economics and discuss whether other-regarding behavior should be considered in this field of research. Finally, we argue that further research is needed to uncover the mechanisms of social influences and to look for closer connections between theoretical models and experimental findings. A central problem is, as we will see, that many field experiments consider several interventions simultaneously to create effective policy, which makes it impossible for the researcher to clearly identify the causal effects.

2.2 Behavioral Economics

Before we look at some important models and the evidence on other-regarding preferences in this section, we discuss the differences between behavioral and standard economics in more depth. Basically, we argue that there are two major aspects that distinguish both fields. As written in the introduction, the first distinguishing factor is that the modeling of agents is different in behavioral economics than in standard economics. In the standard model agents are assumed to be rational and self-interested, while agents in behavioral economics can be boundedly rational, have limited willpower and need not be fully self-interested. The second difference we want to elaborate more at this point, is that modern behavioral research is based on empirical and especially experimental findings, which describe robust behavioral phenomena that systematically deviate from the predictions of the standard model.² This distinction is a critical component in the definition of modern behav-

2Some researchers distinguish between modern and classical behavioral economics, see Kao and Velupillai (2015) for example. While modern behavioral economics is based on neoclassical modeling, classical behavioral economics uses different approaches to theoretically model behavior. We do not make use of this terminology in this text.

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ioral economics. Neither personal taste, nor criteria of beauty, nor complexity should be used to evaluate models, but their ability to make predictions that are consistent with experimental research.

While we draw a clear distinction between behavioral and standard economics, there is merit in the view of Thaler (2016) who thinks that behavioral economics will become standard economics again. He argues that economics has been behavioral until the 1930s, when the standard model became the prevailing way to analyze economic decisions. He illustrates his point by quoting ideas from Adam Smith, Arthur Cecil Pigou, John Maynard Keynes and other famous economists that are not consistent with the standard model.

Further, he cites Clark, who argued over one hundred years ago that economics must not ignore psychology. Because of its importance, we want to make a direct quote of the same paragraph:

”The economist may attempt to ignore psychology, but it is a sheer im- possibility for him to ignore human nature, for his science is a science of human behavior.(. . . ) If the economist borrows his conception of man from the psychologist, his constructive work may have some chance of remaining purely economic in character. But if he does not, he will not thereby avoid psychology. Rather, he will force himself to make his own, and it will be bad psychology.”(Clark, 1918)

We are convinced that making a clear cut between behavioral economics and the standard model is important to illustrate the differences between both approaches in a stylized way. Basically, the view that behavioral economics is just economics can be shared at the same time.

In the next subsection, we illustrate some important models of social preferences that we think are central and representative for the field and deal with the discussion of social norms and external validity thereafter.

2.2.1 Social Preferences

As illustrated above, the standard model in economics assumes human behavior to be purely self-interested. Based on the experimental research in economics and psychology, several theories have been developed which can describe human behavior that is not only motivated by self-interest.

One explanation for pro-social behavior proposed in behavioral economics is altruism. While different types of altruism are considered in the literature, we look at impure altruism in order to illustrate the basic idea of the concept.

Impure altruists can increase their utility by helping others. When a gift

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enters the utility function of the donating agent directly, the motivation is also called warm-glow. With the goal to explain donations in a simple public goods model with a linear technology, Andreoni (1990) uses the following utility function:

U_i =U_i(x_i, G, g_i), (2.1) where utility increases in private consumptionx_i, in the aggregated gifts G made by all agents and in the donation g_i made by agent i. This utility function models impure altruism, which is a combination of the utility function of an agent that is motivated to give by warm-glow U_i = U_i(x_i, g_i) and by the utility function U_i = U_i(x_i, G) of an agent who is purely altruistic.

We see that warm-glow depends on an agent’s own benevolence, while pure altruists only care about the end result. Impure altruism encompasses both motivations.

While the direction of the effects of altruistic preferences on behavior are distinct, another theory of social preferences argues that people are affected by inequality and have a desire for fair distributions. The well-known theories of inequality aversion were originally proposed by Fehr and Schmidt (1999) and Bolton and Ockenfels (2000). In both models it is assumed that agents dislike unequal distribution of payoffs. The model proposed by Fehr and Schmidt (1999) has the following utility function:

U_i(x) =x_i−α_i 1 n−1

X

j6=i

max{x_j −x_i,0}

−β_i 1 n−1

X

j6=i

max{x_i−x_j,0}. (2.2) Here we see that agenticompares his monetary payoffx_i individually to each payoffx_j obtained by the other agents, experiencing a loss in utility whenever the payoffs are unequal. Generally it is assumed that the inequality costs are relatively higher when the payoff-inequality is detrimental to an agent (α_i > β_i). The inequality aversion by Bolton and Ockenfels (2000) assumes a similar combination of individual payoffs and costs from inequality aversion.

The major difference between the models is that in the latter the agents compare their payoff with the average of the aggregated payoffs of all agents and not with each payoff individually.

In my view, the models on inequality aversion are quite similar to another social preference. Inequality aversion may even be regarded as a specific application of the more general idea of conformism, which is extensively studied

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in psychology. To the best of my knowledge, Jones (1984) was the first to bring this idea to the field of economics. People with a preference for conformity compare their behaviors or actions and not the payoffs, which are results of their actions. Hence, the conformism model differs from inequality aversion in how the reference point is constructed.³ The theory of conformism assumes that individuals have the desire to show the same behavior, so that the model assumes that the agents compare their actions and loose utility whenever their actions diverge (Luzzati, 1999; Hehenkamp and Kaarboe, 2006). Akerlof (1997), for example, presents a simple utility function with quadratic conformity costs:

U(x) =−ax²+bx+c−d(x−x)². (2.3) When the actionxof the agent differs from the action xchosen by all other agents, he experiences conformity costs. We see that nonconformist behavior causes costs that depend on the difference in actions squared times the parameterd > 0. This is not the only way to explain conformity. Basically, there are two groups of models as Bernheim and Exley (2015) point out.

In the first group illustrated above conformity is explained by a preference mechanism. Agents have a direct preference for conformity in these models, only the strength of the desire and the reference behavior are influenced by outside forces. In the second group of conformity models behavior is affected through belief mechanisms. In these models agents choose to conform when their behavior can be observed by other agents. Agents show conformism in order to gain or preserve their social status. Early models falling in this group are by Akerlof (1980) and Bernheim (1994).

Another related social preference is also explained by signaling. Agents with a desire for social status can also consume competitively. The idea of status consumption is based on the thoughts in the book ”The theory of the leisure class” by Veblen (2007), which was already published in 1899. In these models agents consume special goods in order to increase their social status relative to others, see e.g. Arrow and Dasgupta (2009).⁴

3A reference point can enter an agent’s utility function and can therefore affect decisions.

Depending on the information and context of the decision the reference point can be determined by behavior or by payoffs.

4Already Akerlof (1997) distinguishes between two fundamental classes of other-regarding behavior that are still important. The first class consists of conformity models, where an agent’s utility decreases whenever his behavior deviates from other people’s actions,

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Dasgupta et al. (2016) provide another useful categorization of the social preferences we have considered so far. They distinguish between socially- directed and socially-embedded preferences. Agents are said to have socially directed preferences when they care about how their decisions affect the welfare of others. Agents with socially-embedded preferences are affected by the decisions of others. The latter can be subdivided into competitive consumption where agents try to outperform others, we called these status models before, and conformity models where agents suffer from a loss in esteem when they deviate from a consumption norm.

Nevertheless, our discussion of social preferences is not complete. There are some other theories, which are also relevant. An important one is the idea of reciprocity. Agents who behave reciprocal act kind towards people who act kind and are willing to punish agents who are unkind. Theoretical models of reciprocity preferences are proposed by Rabin (1993) and Falk and Fischbacher (2006), for example.

Another class of models related to all those from above are theories that assume that agents are not only motivated by socially-directed preferences or by social comparisons of behavior or payoffs with other agents, but by the expectations others have. The most influential one assumes that agents are guilt averse and experience guilt whenever they do not meet or exceed the expectations of others (Battigalli and Dufwenberg, 2007).⁵ Since it is not always possible for an agent to exactly know the expectations (first- order belief) of another agent, they build second-order beliefs about their expectations and act according to these. There are two types of beliefs, the first one contains a single reference point, while the second one consists of the whole distribution of possible expectations as a reference. Khalmetski et al.

(2015) add surprise seeking to the guilt aversion model. Surprise seeking agents can increase their utility when expectations are outperformed. To explain findings from a dictator game, the authors use the surprise function S_i which contains the effects of guilt aversion and surprise seeking:

S_i(t_i|h_j) =α_i Z ti

0

(t_i−x)h_j(x)dx+β_i Z 1

ti

(x−t_i)h_j(x)dx. (2.4) Here the reference point is given by the density functionh_j andt_i is the nor- malized amount given to the receiver. The first part of the surprise function

and the second class of models in which an agent’s utility increases the higher his own status is compared to others. The second class is called status models.

5Another related theory is lying aversion, see Lundquist et al. (2009).

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describes the expected benefits from surprises, the second part the expected costs from guilt. We see that the first integral adds up the benefits from out- performing the expectations and the second one the costs from transferring less than expected.

Finally, another class of models can be subsumed under social preferences.

Agents’ decisions can also be influenced by ethical considerations, which can for example be based on utilitarian or Kantian ideas. E.g. Brekke et al.

(2003) study a public goods game with utilitarian agents. They assume that agents have a desire to conform, not with the behavior or expectations of others, but with the welfare optimal behavior. Deviations are costly as in the conformity models illustrated above. An overview about these models is given by van Long (2016), who also provides an extensive review of the theoretical and empirical literature on social preferences in environmental economics.

In our non-extensive survey on behavioral models, we have seen that on the one hand we have social preferences which pull actions of different agents together and on the other hand social preferences that can explain why behavior becomes more differentiated than in the standard model. Further, we have seen that a mathematical representation of the decision problem can also include moral decisions of agents. Obviously, interactions of different preferences are possible, which we have not considered here.⁶

2.2.2 Social Norms

In the previous subsection we have illustrated how social preferences influence behavior. But we left out an important concept from the discussion: Social norms. As we show later, the effects of social norms on pro-environmental behaviors have been an important topic in behavioral environmental economics, especially since several high-quality experiments provide insight into the effects of social norms. Thus, we provide a quick overview about the theoretical background and illustrate the argument by Fehr and Schurtenberger (2018) concerning the connection of social preferences and social norms.

Research of social norms in economics has been influenced by psychology.

In particular the definitions of descriptive and injunctive social norms by Cial- dini et al. (1990) have had a major impact on economics. While descriptive

6For example Khalmetski et al. (2015) add a desire to surprise to the guilt aversion model in order to improve the description of behavior in dictator games.

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social norms describe a common behavior in a specific situation, injunctive social norms consist of the judgments (approval/disapproval) of others on a specific behavior. In sum, descriptive norms inform about the behavior of others, while injunctive norms tell people how one should behave in a particular situation. Another important factor in their theory on the influence of social norms is that norms must be activated (e.g. made salient) in order to have a measurable impact on behavior (focus theory of normative conduct).

This definition is different from what economists usually mean when they talk about social norms. Nyborg (2018) illustrates the role of social norms in economic theory and stresses, quoting Young (1998) and Young (2015), that in game theory a social norm must be self-reinforcing. Thus a social norm must be an equilibrium of the underlying game. What is remarkable here is that social norms in game theory do not rely on social preferences that enforce behavior which is consistent with a norm. Even for fully self-interested and rational individuals it is reasonable to follow the norm. Nyborg et al. (2016) try to unite both definitions in a paper on the importance of tipping points for social norms. Based on both concepts, Nyborg et al. (2016) make the following definition: ”We define a social norm as a predominant behavioral pattern within a group, supported by a shared understanding of acceptable actions and sustained through social interactions within that group.”(Nyborg et al., 2016) Further, the differences between social and private norms, which are based on moral considerations, are illustrated in Nyborg (2018).

Keeping these basic concepts in mind, we can take a look at another relevant review of social norms provided by Fehr and Schurtenberger (2018).

Their major focus is to explain the conditional cooperation norm which is observed in many experimental markets. Conditional cooperation is defined by the authors as at least matching average contributions in a public goods game. In order to explain adherence to this social norm, Fehr and Schurten- berger use what they call the direct social norm approach. As in the case of conformity preferences or guilt aversion illustrated above, agents are sup- posed to experience a loss in utility when they do not follow the norm. Since they assume that only contributing less than the norm is costly, the approach is more similar to the guilt aversion model. Fehr and Schurtenberger do not describe how the norm has emerged, they only argue that social preferences provide the motivation for subjects to conform with a social norm.⁷ Further,

7This idea is not fully new. Already Henrich and Boyd (2001) develop a theoretical model that explains reciprocity from the assumption that agents have a desire for conformity.

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the authors argue that while social norms are an important factor in explaining behavior, the clear mechanisms through which norms operate are not yet identified.⁸

In this subsection, we have considered the most important definitions of social norms. In the rest of the chapter we use the term social norm having the psychological definitions in mind. In accordance with Fehr and Schurten- berger (2018), we assume that people are motivated by social preferences to comply with social norms and that the social norm approach is justified.

2.2.3 Experimental Evidence on Social Preferences and Norms

All types of social preferences illustrated in this section have been empirically studied in economics and psychology. A discussion of the entire literature is beyond the scope of this text. For a review of the evidence see Sobel (2005), Camerer (2014) and Malmendier et al. (2014). All these reviews show that social preferences and norms can provide a better description of human behavior than the standard model. In the following review of the experimental evidence, we focus on two social preferences that seem to be closely related to the theory of norm compliance. We look at conformity and guilt aversion in particular. Experimental evidence from psychology and economics indicates that people have a desire for conformity. Early evidence stems from the field of psychology, see e.g. Sherif (1937), Asch (1955) or Deutsch and Gerard (1955). Two recent experimental studies in economics by Bernheim and Exley (2015) and Charness et al. (2019) find evidence for conformity. Additionally, both papers provide a good overview of the literature. Charness et al. (2019), for example, study a standard trust game and find that players are affected by beliefs of other players in the same role. Further, they find that conformism is opportunistic in the sense that subjects who have a high level of trust are affected by the information that others tend not to trust, while non-trusting players are not influenced by the information that others tend to trust.

Nevertheless, the formation of social norms in a dynamical context is still an important question for theoretical research. Rangoni and Jager (2017), for example, study littering and social norms in an agent-based model.

8At the end of their paper Fehr and Schurtenberger (2018) provide an extensive list of ten unsolved questions.

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Guilt aversion has been shown to be able to improve predictions of behavior in standard laboratory experiments, see Charness and Dufwenberg (2006) for example. In spite of the early evidence, Ellingsen et al. (2010) conduct a dictator game, a trust game with complete information and a trust game with hidden action. They only find low correlations of beliefs and behavior, where the participants are informed about the first-order beliefs of the other participant playing with them. The authors conclude that the effects are smaller than found in the previous literature. Possible explanations for the previous results suggested by the authors are that in previous studies beliefs of participants have been elicited by asking participants directly and that the non-standard behavior might be due to the false consensus effect. Khalmet- ski et al. (2015) reproduce the dictator game experiment of Ellingsen et al.

(2010). While they also find no significant effects in the in-between-subject data, a closer analysis reveals correlations in the within-subject data. Fur- ther, they show in the same paper that the predictions can be improved by adding surprise seeking to the guilt aversion model. Additional supportive evidence is found by Bellemare et al. (2017) and Dhami et al. (2019). But since the proposal of surprise seeking is relatively new, we focus on conformity and guilt aversion in the following discussion in this subsection.

Instead of looking at all of the evidence in detail, we consider two points that are important for future research and which are central for our discussion of behavioral environmental economics. The first is that in addition to social preferences as described above, social norms from the outside can have an effect on the behavior of subjects in lab experiments. This is also related to the question of the generalizability of experimental findings we will discuss in the following subsection. The second important point is the difficulty to distinguish between different behavioral explanations for systematic deviations from the standard model, since in many lab experiments observed behavior is consistent with the predictions of several social preferences.

Considering the first point, several studies in experimental economics conducted in the recent years show that the behavior in lab experiments can be influenced by factors from the outside that are brought into the lab by subjects. To illustrate this we look at three papers. For example, Malmendier et al. (2014) find evidence that the behavior in experiments does not only depend on the incentives and the social preferences inside the experiment, but also on social norms outside of the experiment. This insight comes from the analysis of dictator games. Subjects play either a single standard dictator game or two dictator games with role reversal. In the case of role reversal,

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subjects play a mini-dictator game with small payoffs, where the dictator can only make a binary decision between contributing 0$ and 1$, before the standard dictator game with changed roles is played in order to investigate whether the dictators in the second game show reciprocal behavior. These games are played in two treatments. In one treatment, the dictator in the standard dictator game can choose to opt out from the game and to take the payoffs without playing, while in the second treatment sorting is not possible. Comparing the sorting with the non-sorting treatment, average contributions in the dictator game are reduced. Further, Malmendier et al.

(2014) argue and illustrate that the sorting behavior cannot be explained by reciprocity preferences but that outside social norms might be an explanation for subjects’ behavior.

The findings by Kimbrough and Vostroknutov (2016) also support the theory that social norms from the outside influence behavior in an experiment.⁹ The study conducted by Kimbrough and Vostroknutov (2016) consists of two stages. In the first stage an incentivized experiment is conducted with all subjects in order to determine their desire to conform with a social norm.

In the second stage the subjects play either public goods, trust, ultimatum or dictator games. Finally, subjects have to answer a questionnaire in order to elicit their private norms. The authors find that the desire to conform with norms measured in the first stage explains pro-social and cooperative behavior in the following experiments.

In the paper by Danilov and Sliwka (2017) several laboratory experiments are presented that investigate how contracts can signal social norms. Espe- cially interesting is the design of their main experiment in which they study a one-shot principal agent model. Principals can offer agents two types of contracts, one with a fixed wage or one with performance-based payments.

In the treatment principals are informed about the behavior in a previous control treatment and the agents only receive the information that principals have seen these previous results. They find that this treatment increases the efforts of the subjects who are offered a fixed wage. In sum, the authors find evidence that agents are influenced by behavior of other agents who acted in the same setting that is not related to their decision problem whilst not being able to observe it by themselves.

9This is consistent with findings that people try to avoid situations in which they can make donations to others (Dana et al., 2007; Andreoni and Bernheim, 2009; DellaVigna et al., 2012; Lazear et al., 2012). One possible explanation for this is that the subjects want to avoid social pressure.

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These findings stress the impact of social norms on behavior and some- what question the explanatory power of earlier social preference models.

Thus, differentiating between behavioral models becomes even more relevant. Especially for making theoretical predictions, it is important to know the conditions under which a model applies. In order to illustrate this point we look at some selected studies that were designed to provide insight into this question.

The paper by Bardsley and Sausgruber (2005) belongs to this category of research and is a good starting point due to its intuitive design. Their approach is related to the one of Danilov and Sliwka (2017) illustrated above.

In their study two explanations for conditional cooperation found in public goods games are compared. They distinguish between two possible social preferences we have encountered so far. One explanations can be that subjects have an inherent social preference for reciprocal behavior, a second explanation could be a desire for conformity. To disentangle the direct effects of conformity and reciprocity a tailored design is used. Subjects are divided into two groups which play two separate public goods games. The important distinction is the information structure. While a subject in the first group only has information on the behavior of its own group, a subject who is a member in the second group can observe the behavior of both groups. The major research question is whether the behavior in the first group influences the behavior in the second.¹⁰ Based on the experimental results, Bardsley and Sausgruber (2005) calculate that the desire for conformity can explain one third of the conditional cooperation when both social preferences are assumed to be additive. Further, they argue that the effect is inconsistent with inequality aversion concerning the payoffs.

Hauge (2016) studies the effects of two different types of informations in a dictator game. The first one she calls guilt-from-disappointment and the second one guilt-from-disapproval. To determine the former the recipients were asked which transfer they would expect on average and for the latter which transfer should be made. Obtaining experimental data in a standard dictator game where the dictators either receive information about the expectation of the recipient on the average behavior or the moral expectation, positive effects on transfers are found for both treatments. Hauge (2016)

10The actual design is even more detailed than explained here in order to exclude alternative explanations to conformity. The interested reader is thus relegated to the original paper.

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concludes that these findings cannot be explained by altruism and inequality aversion, but by guilt aversion.

Krupka et al. (2017) conduct double dictator and Bertrand games to study three explanations as to why informal agreements influence behavior:

injunctive social norms, guilt aversion and lying aversion. Additional to the choice experiments, they conduct coordination games to obtain data on social norms. With these data they use structural statistical models to estimate the effects and find that the injunctive social norm has the biggest effect on behavior. Including the other theories into the statistical model can improve the prediction, but the influence of the social norm remains much stronger than the other effects.

In a recent working paper, Danilov et al. (2018) construct a theoretical model and a lab experiment in order to distinguish between two important theories on human behavior, the desire to conform with descriptive social norms and guilt aversion. In order to isolate the effects of both motivations, dictator games are played. The authors argue that dictators being informed about either the expectation of the recipient or the average behavior makes it impossible to distinguish between the explanations. The reason for this is that the knowledge can be used to learn about the other information. Thus, the authors analyze the behavior when subjects obtain both types of information. The study consists of three parts. The first two parts of the experiment serve to obtain some basic data like expectations and average transfers. In the third part the final dictator game is played, where dictators are informed about average transfers and the transfer expected by the matched recipient, which were determined in a preceding part of the study. Using this data, the authors find that the descriptive norm has a significant effect on transfers, which increase in the norm. The effects of the expectations are more complicated. Dictators ignore high expectations and use individual expectations only to reduce transfers showing a self-serving behavior. Nevertheless, evidence for both behavioral models is found in their study.

In this subsection, we have argued that experimental economics and psychological research show that social preferences influence behavior. Further, we have seen that in the recent literature in economics the importance of social norms for describing behavior has been recognized. While behavioral theories provide more accurate predictions of behavior than the standard model in many cases, the concrete mechanisms are often not clear. In many situations several theories can explain consistently why people deviate from the standard prediction. More experimental research is needed to disentan-

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gle these theories. We have seen that social norms can play an important role in explaining behavior. We will see later that the effects of social norms are highly relevant for environmental economics. But before we take a look at the research in behavioral environmental economics, we want to consider an important question: Do the general findings from behavioral economics and especially those from laboratory experiments generalize to the field of research of environmental economics?

2.2.4 Generalizability of (Lab) Experiments

For a long time the belief was held that it is not possible to conduct experiments in the social sciences. It was argued that this rigorous method to gain knowledge could only be applied in the natural sciences, since human behavior, especially in markets, would be too complex to be researched experimentally. This view has changed. E.g. Falk and Heckman (2009) illustrate how lab experiments have become an established method in the social sciences. They argue that findings in the lab have increased insight into economic phenomena and can be generalized to the real world. They stress that the crucial advantage of experiments is the ability to uncover causal relationships.

Nevertheless, other scientists have questioned the relevance of lab results for real world economic problems. One prominent and heavily cited critique was expressed by Gary Becker in an interview. While not being opposed to be called a behavioral economist, he disagrees with the idea that the biases found in lab experiments are relevant for actual behavior in markets (Clement, 2002).

Thaler (2016), for example, rejects the critique on the relevance of lab experiments for behavioral economics. He argues that assuming rational behavior is only reasonable when decisions are sufficiently simple and illustrates his point with a comparison of the games tic-tac-toe (relatively simple) and chess (relatively complicated). Further, as a direct response to Friedman’s prominent ”as if” hypothesis he writes that high stakes decisions tend not to be made often, so that for many important decisions no expertise can be gained through learning. Finally, he argues that competition does not eliminate the biases.¹¹

11Other economists drive the argument even further and argue that these biases pertain while being exploited in markets, see Akerlof and Shiller (2015).

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In my view, the dispute on the external validity of lab experiments is not finally resolved. Obviously, which standpoint is correct can only be determined by empirical research. Since the goal of economics is not to be a purely normative theory, experimental research has to be utilized in order to determine which theories can be regarded as true unless being falsified by experiment. Thus, the only way to resolve this debate is by testing the theories in actual markets.

Fortunately, empirical researchers have developed a sophisticated method that can provide insight into this important question. Today, experiments in economics and other social sciences are not only conducted in university laboratories but also in the field.¹² Talking about field experiments, one is usually referred to Harrison and List (2004), who provide a still useful categorization of field experiments. According to the authors, one can distinguish between three types: artefactual field experiments, framed field experiments and natural field experiments.

In order to compare these with lab experiments, the authors look at a list of criteria: ”We propose six factors that can be used to determine the field context of an experiment: the nature of the subject pool, the nature of the information that the subjects bring to the task, the nature of the commodity, the nature of the task or trading rules applied, the nature of the stakes, and the environment in which the subjects operate.”(Harrison and List, 2004). With respect to these criteria the authors classify different types of field experiments relative to the lab. One can say that the ”naturalness”

of a field experiment increases in type. The first type are artefactual field experiments. These are experiments that are still conducted like standard lab experiments. The only difference is the subject pool. While standard lab experiments rely on students as subjects, in artefactual field experiments subjects are chosen according to the field of interest. The second type are framed field experiments that are basically artefactual field experiments but with a commodity the subjects are used to and designed so that subjects can use information gained prior to the experiment. The third type are natural field experiments. A natural field experiment is conducted in a natural setting in which subjects usually operate in. A crucial distinction compared to the other designs is that subjects do not know that they partake in an experiment.

In the same article, the authors argue that the external validity of lab

12Levitt and List (2009) provide an overview of the development of field experiments in economics up to the modern generation of experiments.

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experiments is limited and that lab and field experiments should thus be seen as complimentary. They speculate that the reason for this might be the higher degree in control the researchers have in a lab setting compared to the field. Further, they argue that one has to basically assume that the behaviors in lab and field are parallel in order to come to the conclusion that the lab generalizes to the field.

In a follow-up paper by Levitt and List (2007b) the authors elaborate more on this point. Their discussion is especially relevant for our review since it puts the focus on the generalizability of lab results when subjects have social preferences. We have already looked at social preferences in the previous section, so that we can directly consider the critique of the authors.

Basically they argue that laboratory findings in economics do not generalize to the field as in physics since the behavior of humans is involved. Monetary incentives and at least the following conditions influence the bahavior of subjects in experiments: ”1) the presence of moral and ethical considerations;

2) the nature and extent of scrutiny of one’s actions by others; 3) the context in which the decision is embedded; 4) self-selection of the individuals making the decisions; and 5) the stakes of the game”(Levitt and List, 2007b).

What is remarkable here is that especially the first two points assume that agents do not act fully rational as the standard model assumes. The authors themselves stress this point later in their paper: ”We are not denying that individuals have social preferences; indeed, our own model assumes that moral costs can be influenced by a concern for others as well as a concern for one’s own appearance. Rather, we are interested in the extent to which the lab provides reasonable guidance as to the importance of such behavior in a wide range of naturally-occurring settings.” (Levitt and List, 2007b).

Additionally, the authors discuss the problem of artificial restrictions on choices and time which are imposed in lab experiments and are different from those in markets. They conclude that field and lab experiments are complementary methods and that one has to utilize their advantages in research. An important factor for the superiority of field experiments concerning external validity are social preferences.

In another paper from the same year Levitt and List (2007a) look at the generalizability of lab results when social preferences and moral decisions play no role. Here they identify five factors that negatively influence external validity. These are: stake size, non-random selection, experience of subjects,

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the time frame and group differences.¹³ The authors argue that findings from a lab experiment can be generalized to the field when the factors that influence external validity are not relevant. Further, they write: ”Moreover, except in rare circumstances, laboratory experimentation is likely to be a useful tool for providing qualitative evidence, even when thegeneralizability of deep structural parameters is suspect.” (Levitt and List, 2007a) They also stress that lab experiments can better identify basic behavioral mechanisms than field experiments.¹⁴

In sum, we see that there are several arguments as to why field experiments have a higher external validity than lab experiments. Nevertheless, the papers by Levitt and List stress some advantages of lab experiments and argue in general that both approaches should be seen as complementary ones.

But there is no consensus in the literature on whether the external validity of field experiments is higher than of lab experiments. Camerer (2015) rejects the arguments of Levitt and List. He illustrated that there are actually two perspectives one can take on experiments, the scientific view and the policy view. The former means that all empirical studies help uncover the general behavioral function, which describes human behavior in the lab and in the field. Following this perspective, asking for external validity of a specific experiment is just not reasonable. Only in the latter view external validity makes sense because policy is interested in a concrete context where the details of behavior matter.

In the view of Camerer, external validity is not important, but the internal validity of an experiment is what matters. He quotes Falk and Heckman because he is convinced they formulated his point even better. Thus, we take a look at the same quote: ”The issue of realism, however, is not a distinctive feature of lab versus field data. The real issue is determining the best way to isolate the causal effect of interest.”(Falk and Heckman, 2009)

Before going on with the thoughts of Camerer, we can already note at this point that the differences between the two sides are smaller than one would think at first sight. While lab experiments tell us about behavior in general, for a concrete policy question a field experiment targeted to this specific question is also preferred by Camerer in order to get the effect sizes right. Camerer only questions the idea that field experiments can always be

13Later in the text they also discuss the role of institutions that might develop endogenously in real markets.

14For a short summary of all these arguments brought forward by the authors, see also Levitt and List (2008).

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better generalized to another field of interested than lab experiments. He argues that the question whether a lab experiment or a field experiment is higher in external validity cannot easily be answered. Nevertheless, he tries to differentiate between the lab and the field. He lists three dimensions that can be used to compare the lab and the field: ”In comparing methods, lab experiments do have three special features that distinguish them: near-perfect replicability, measures of cognition, and obtrusiveness.”(Camerer, 2015) Ob- viously, the first two are advantages, only obtrusiveness could be a downside of the lab compared to natural experiments.

Since our focus is on social preferences, we take a closer look at the reply of Camerer to the five points above from Levitt and List (2007b) concerning the role of social preferences and morals for external validity. Basically, he agrees that moral and ethical considerations are important, but he argues that there are no relevant differences between the lab and the field when the features of the lab experiments correspond with the field of interest. For example, in lab experiments of dictator games it can also be shown that gifts are smaller when money is earned by the subject. Obtrusiveness might be a problem in psychological experiments, it is not in economic experiments.

The reasons for this is that subjects are not good at guessing the intentions of the experimenter. Empirical evidence for this point is provided. Further, in economic experiments the test subject would loose real money and it can be shown that behavior hardly changes as monetary incentives are increased.

Concerning the context, which has been shown to be important, Camerer (2015) argues that the control in the lab is an advantage since it is higher than in the field. According to the author, the problem of self-selection is basically the same across all empirical research, while methods to lessen this problem can be used. Further, the effects of changing stakes are generally not as big as generally thought and it is possible for researchers to vary stake sizes in experiments.

Summarizing his discussion, he argues that the best way is to conduct more experiments to answer the question of external validity. As the author points out this view is also shared by Falk and Heckman (2009).¹⁵ Finally, he looks at several experiments and concludes that lab experiments can be generalized. Only when one has a specific setting in mind (policy view) one should consider an experiment tailored to the research question.

15We focused on the arguments by Camerer (2015), Falk and Heckman (2009) use similar arguments to refute the arguments by Levitt and List presented and cited above.

Social Comparisons and the Environment: Essays on the Effects of Conformity, Guilt Aversion and Surprise Seeking

Malte Martin

Social Comparisons and the Environment:

Essays on the Effects of Conformity, Guilt Aversion and Surprise Seeking

Fakultät für

Wirtschafts-

wissenschaft

Social Comparisons and the Environment:

Essays on the Effects of Conformity, Guilt Aversion and Surprise Seeking

Inauguraldissertation

zur Erlangung des akademischen Grades des Doktors der Wirtschaftwissenschaft (Dr. rer. pol.) der Fakult¨at f¨ ur

Wirtschaftswissenschaft der FernUniversit¨at in Hagen

Acknowledgements

Contents

1 Introduction

References

2

Social Preferences and Norms in Environmental Economics

2.1 Introduction

2.2 Behavioral Economics

2.2.1 Social Preferences

2.2.2 Social Norms

2.2.3 Experimental Evidence on Social Preferences and Norms

2.2.4 Generalizability of (Lab) Experiments