Endogenous Social Norms, Mechanism Design, and Payment for Environmental Services

Botao Qin and Jason Shogren

MPRA Paper from University Library of Munich, Germany

Abstract: Herein, we examine the optimal contract design when social norms have a disutility on landowners' participation in payment for environmental services programs. We find that a regulator can use less powerful monetary incentives to induce landowners to retire more land when the regulator appeals to social norms. Next, we consider the case when landowners determine the social norms of land retirement endogenously given that they live in small communities. We find that when there is asymmetric information about personal norms, the high-personal-norm type will retire more than the optimal amount of land and the low-personal-norm type will retire less than the optimal amount of land. We also explore when there is asymmetric information about landowners' sensitivities to social norms. We find that the optimal contract design depends on the relative magnitude of landowners' personal norms and the expected social norms. The results differ from the standard mechanism design literature.

Keywords: Social norms; Mechanism design; Payment for environmental services; Asymmetric information (search for similar items in EconPapers)
JEL-codes: D82 D91 Q57 (search for similar items in EconPapers)
Date: 2023-05-01
New Economics Papers: this item is included in nep-agr, nep-des, nep-env and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/112878/1/MPRA_paper_112878.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:112878

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().