Challenging conventional wisdom: Experimental evidence on heterogeneity and coordination in avoiding a collective catastrophic event

Abstract

Avoiding a catastrophic climate-change event is a global public good characterized by several dimensions, notably heterogeneity between the parties involved. It is often argued that such heterogeneities between countries is a major obstacle to cooperative climate policy. We use a stylized game mimicking basic features of the climate-change dilemma to experimentally study the effect of two important heterogeneities, wealth and loss when a catastrophic event occurs. We find that under loss heterogeneity the success rate in achieving sufficient mitigation to prevent a catastrophic event is higher than under symmetry. Moreover, neither endowment heterogeneity nor the combination of endowment and loss heterogeneities lead to significantly different success rates than under symmetry. These findings suggest that heterogeneities may in fact facilitate rather than hinder successful cooperation in catastrophe prevention.