The effects of social norm sensitivity in a PES mechanism

Botao Qin (), Jason Shogren and Thorsten Janus ()
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Botao Qin: Xi'an Jiaotong University
Thorsten Janus: University of Wyoming

Economics Bulletin, 2025, vol. 45, issue 2, 792 - 800

Abstract: In this paper, we study the effects of heterogeneous sensitivities to social norms when an environmental regulator designs a mechanism for land retirement. We show that when the social norm exceeds the personal norm, as expected, landowners who are relatively sensitive to social norms (``conformists") retire more land. However, when the social norm is below the personal norm, landowners who are more sensitive to personal norms (``individualists") conserve more. Endogenizing the social norm shows that the efficient provider might not supply the efficient quantity of land retirement.

Keywords: Social norms; Mechanism design; Payment for environmental services; Asymmetric information (search for similar items in EconPapers)
JEL-codes: D8 Q5 (search for similar items in EconPapers)
Date: 2025-06-30
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