Inequality, communication, and the avoidance of disastrous climate change in a public goods game

TLDR

Global public‑goods provision is hampered by coordination challenges, inequality, and free‑riding. Participants received unequal endowments and attempted to reach a target sum through successive contributions, with a 50 % chance of losing all remaining money if they failed, and in some treatments they could communicate their intended contributions. Inequality lowers the chance of reaching the target, but communication dramatically increases success; successful groups eliminate inequality over time, with richer players signaling willingness to redistribute early, suggesting that coordination‑promoting institutions and early redistribution from richer to poorer nations are decisive for avoiding global calamities such as disruptive climate change.

Abstract

International efforts to provide global public goods often face the challenges of coordinating national contributions and distributing costs equitably in the face of uncertainty, inequality, and free-riding incentives. In an experimental setting, we distribute endowments unequally among a group of people who can reach a fixed target sum through successive money contributions, knowing that if they fail, they will lose all their remaining money with 50% probability. In some treatments, we give players the option to communicate intended contributions. We find that inequality reduces the prospects of reaching the target but that communication increases success dramatically. Successful groups tend to eliminate inequality over the course of the game, with rich players signaling willingness to redistribute early on. Our results suggest that coordination-promoting institutions and early redistribution from richer to poorer nations are both decisive for the avoidance of global calamities, such as disruptive climate change.