Wednesday, December 7, 2016 | 2:00pm-3:30pm | Room 335, HSBC Business School Building

Abstract

A group's ideals, or norms, can determine whether agents join the group and the behavior of those who join. These ideals can affect the provision of a public good, such as the reduction in greenhouse gas emissions. Agents have different preference for this public good. Acceptance of climate science confers membership as a "climate insider" creating both "identity utility " and disutility if the member deviates from the group ideal. The group ideal might create a wide but shallow group (one with many members but having little effect on their behavior) or a narrow but deep group. With uniformly distributed preferences, the contribution-maximizing ideal is wide but shallow when there is little heterogeneity, and narrow but deep when heterogeneity is large. The contribution-maximizing ideal also maximizes welfare if the population is large. We also consider general distributions of preferences.