Esther Blanco

Externalities in appropriation: responses to probabilistic losses

AbstractUsing an appropriation game setting, we examine individual responses to changes in a groups’ vulnerability to a probabilistic loss (L) of a public good. The probabilistic loss parameter entails losing 10, 50 or 90% of the value of the public good that is maintained through cooperation, where the likelihood of the loss decreases in total group cooperation. By design, the expected marginal net benefits to an individual and the expected harm to others depends endogenously on the individuals’ expectations of group cooperation and exogenously on the magnitude of the loss parameter. We find that individual cooperation is greater when forecasts of total group cooperation are greater and where the magnitude of the probabilistic loss is larger. There is, however, an interesting asymmetry in responses by two subgroups. Subjects who are pessimistic regarding total group cooperation decrease cooperation the higher the magnitude of the probabilistic loss and their decisions are tied systematically to changes in their expectations of other’s cooperation. On the other hand, subjects who are optimistic regarding total group cooperation are found to be more cooperative, but their decisions are not systematically tied to changes in expectations of others’ cooperation.

An Experimental Study for Environmental Fundraising in Majorca, Spain

Purpose – This chapter tests the effectiveness of different institutions to fundraise for environmental projects at tourism destinations. Methodology – We conduct a series of experiments with tourists visiting the Island of Majorca, Spain, and test the fundraising capacity of a voluntary donation scheme, two tax levels, and a matching instrument. In the first treatment of our experiment, tourists have the opportunity to make a voluntary donation to a local environmental organization involved in environmental projects. In a high-tax and low-tax treatment, tourists are taxed some proportion of their initial endowment and then are allowed to make voluntary contributions from their remaining endowment. In a final treatment, the experimenters match, one-for-one, any voluntary donations. Findings – We test the crowding-out hypothesis of taxes over voluntary environmental donations and find imperfect crowding-out (from 60% to 65% for different tax levels).We also explore potential crowding-in of matching instruments (widely used in nontourism settings for fundraising campaigns), but do not find any support for it. Practical Implications – Our results support the conclusion that it would be reasonable to use voluntary donation programs and tourism taxes complementarily (instead of independently), to increase fundraising for environmental purposes at tourism destinations.