Going green: Framing effects in a dynamic coordination game

Abstract

We study decision-making in a (novel) dynamic coordination game that simulates ‘social tipping’. The game involves groups of three subjects who initially find themselves in a stable state with positive network externalities. Over seven rounds, they have the opportunity to transition to an alternative stable state with higher payoff, based on the other network. The transition is slow, costly and requires coordination to minimize costs.In the experiment, the game is repeated five times, which enables groups to learn to coordinate. We compare a neutral language treatment with a ‘green framing’ treatment, in which meaningful context is added to the instructions. Our findings reveal that green framing significantly increases the number of successful transitions, but also reduces the group's ability to coordinate in subsequent games. Consequently, while green framing results in twice as many transitions, these are also more costly such that payoffs do not differ between treatments.In the context of environmental policy, the experiment suggests general support for ‘going green’, but it also points to green framing causing proponents and opponents to stick to their strategies reducing potential gains from coordination between proponents and opponents of environmentally friendly actions.