Nudging Pro-social Behavior in a Market Experiment with Carbon Offsets

Abstract

Abstract This study uses controlled experiments to analyze the effectiveness of peer-comparison nudges to promote pro-social behavior. Participants make decisions as consumers in a simple posted-offer market (i.e. buyers are price takers) in which reducing consumption produces positive externalities through the purchase of carbon offsets. We analyze the effectiveness of the nudge under two common pricing schemes (ratepaying and non-ratepaying customers), and examine heterogeneous impacts depending on consumers’ concern about climate change and cultural worldviews. Our findings show that on average peer-comparison nudges are equally effective policy tools in both pricing environments. However, the nudges are only effective for those participants concerned about climate change, and for those with individualist or hierarchical worldviews.