The Influence of Reciprocity on Individual Decisions in a Climate Coalition Experiment

Abstract

Purpose: This study examines the impact of individual reciprocal preferences on coalition formation. The reciprocal model considers a player’s own payoff, the player’s perception of others’ payoffs, and others’ perceptions of the player’s payoff. Research design, data and methodology: A reciprocal model is built to illustrate how reciprocity influences individual decisions in a coalition game and its formation. The prediction is examined with experimental evidences from a dictator game and a membership game. Results: The theoretical result suggests that the coalition formation could be unstable due to negative reciprocal kindness. The experimental findings support that negative reciprocal kindness could lead players participating in a coalition, no matter their dominant strategies are. When subjects were essential to make contributions to a coalition, they were more likely to cooperate if they were treated badly. In contrast, when subjects were unnecessary, the reciprocal kindness could enhance cooperative tendencies. Conclusions: This study reveals that the reciprocal behavior could influence individual decisions and reshape the coalition formation. In terms of policy implications, this study has shown that coalition formation could be reshaped by reciprocal prefe rences. Due to the strategic and complicated decision process in an interactive environment, a comprehensive investigation of factors would be required in a climate coalition in practice.