Cooperation for the far future

• Applicant: Professor Dr. Stefan Trautmann
• Subject Area: Economic Theory
• Term: since 2022
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 501104641

In daily life, we see many hints for people valuing very long-run environmental outcomes, but also much evidence of unsustainable actions leading to unsustainable outcomes. Do people not care enough about the environment, or do they fail to cooperate despite the fact that many do care about long-run environmental stability? In this research proposal, we will induce long-term preferences in resource extraction models, and subsequently study the factors that can explain successful or unsuccessful cooperation (despite the presence of long-term preferences) in controlled laboratory experiments. That is, the experimental context induces the preferences, and conditional on these preferences, we study the effect of different conditions and institutions on cooperation outcomes. In contrast to field data, we can systematically vary the institutions, and observe both incentivized revealed behavior and beliefs. In a first project, we will set up a framework where long-term benefits will only accrue if there is within-group cooperation in different groups over time. All agents have an interest in long-term stability, and long-term stability is feasible (i.e., an equilibrium) and can only be reached by cooperation in all groups over time. Project 2 will be based on the same framework. In two subprojects, we will investigate the role of beliefs about cooperation of future groups on cooperation within current groups, as well as studying the effectiveness of political interventions (e.g. punishment) in our framework. We observe that Project 2 builds on project 1 and there depends on the results of Project 1, which renders it riskier. Project 3 will be independent of Project 1 and 2, focusing on an intra-temporal cooperation problem. Again, we will induce long-term preferences that incentivize cooperative behavior. However, to achieve sustainability and to enjoy long-term benefits, cooperation in different groups acting at the same time is necessary. In this experiment, the fraction of cooperative contemporaneous groups influences the incentives for cooperating within a group and, hence, the equilibrium. This enables us to theoretically define a “political tipping-point”, i.e. a threshold in the level of other groups’ cooperation, below which the (within-group) cooperative equilibrium breaks down.

• DFG Programme: Research Grants