Cooperative Choice and its Framing Effect Under Threshold Uncertainty in a Provision Point Mechanism

This paper examines how threshold uncertainty affects cooperative behaviors in each of public goods provision and public bads prevention. The intent is mainly motivated by the following facts. First, resource and environmental problems can be either framed as public bads prevention or public goods provision. Second, the occurrence of these problems is characterized by the existence of thresholds which is interchangeably represented by “nonconvexity”, “bifurcation”, “bi-stability”, or “catastrophes”. Third, the location of such a threshold is mostly unknown to us. For our purpose, we employ a provision point mechanism with threshold uncertainty, and analyze the response of cooperative behaviors to uncertainty and to the framing in each type of social preferences categorized by a value orientation test. First, we find aggregate framing effects are identified to be negligible, though response to the frame is opposite depending on the type of social preference in each subject. “Cooperative” subjects cooperate less, whereas “indivisualistic” subjects cooperate more in a public goods setting. This implies that insignificance of the aggregate framing effect arises from the behavioral asymmetry. Second, we find the percentage of cooperative choices non-monotonically varies with the degree of threshold uncertainty, irrespective of framing and value orientation. More specifically, the degree of cooperation is highest in the intermediate level of threshold uncertainty, whereas it sharply drops as the uncertainty becomes sufficiently large