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Dual Motive Theory in the United States: “I don’t want to

be selling my soul”

Natalia Ovchinnikova, St. Lawrence University Hans Czap, St. Lawrence University

Gary Lynne, University of Nebraska-LincolnChris Larimer, University of Northern Iowa

IAREP/SABE Meeting at LUISS Rome, ItalySeptember 3-6, 2008

Copyright @2008

Permission granted to reproduce for personal and educational use only. Commercial copying, hiring, lending is prohibited.

Theoretical Considerations

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Self-interest Shared Other-interest

Value Rational Choice

Control

Cognition

Consciousness(Feelings)

AffectiveHedonism, e.g.hunger, sexual drive, pleasure and pain

AffectiveSympathy (“in sympathy with”), e.g. share a meal experience, in unity with others, share an ethic, a norm

Subconscious(Emotional tendencies)

Neural Functioning in Dual Motive (Metaeconomic) Theory

Egocentric Empathetic

Self-interest Shared Other-interest

Value Rational Choice

Control

Cognition

Consciousness(Feelings)

AffectiveHedonism, e.g.hunger, sexual drive, pleasure and pain

AffectiveSympathy (“in sympathy with”), e.g. share a meal experience, in unity with others, share an ethic, a norm

Subconscious(Emotional tendencies)

Neural Functioning in Dual Motive (Metaeconomic) Theory

Egocentric Empathetic

Self-interest Shared Other-interest

Value Rational Choice

Control

Cognition

Consciousness(Feelings)

AffectiveHedonism, e.g.hunger, sexual drive, pleasure and pain

AffectiveSympathy (“in sympathy with”), e.g. share a meal experience, in unity with others, share an ethic, a norm

Subconscious(Emotional tendencies)

Neural Functioning in Dual Motive (Metaeconomic) Theory

Egocentric Empathetic

Sharing and Self-Sacrifice in Both Domains of Interest

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Sharing and Self-Sacrifice in Both Domains of Interest

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Two Environmental Economic Experiments

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Background

• CO2 trading:

– European Trading Scheme (ECX)

– Chicago Climate Exchange

• Farmers: carbon sequestration projects -> offsets registered to be sold on the emissions allowance market – Trade offsets against emissions: sell to businesses

represented by the Climate Exchange

– Retire offsets completely: sell or donate to environmental agencies

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Research questions

• Can environmental agencies effectively compete with business in buying carbon offsets?

• Will offset providers sell their offsets to an environmental group at lower price than to businesses?– If yes, what is the discount?

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Experiment 1

• Selling offsets– Viking Climate

Exchange– Conservancy Project

• Rounds 10 or 15:– Price premium

increases

• Conditions/priming – Other-interest– Self-interest– Control

• Psychological traits– Empathy– Locus of control– Autism– Selfism/narcissm

• Demographics:– Rural/urban area– Farmer’s family– Gender– Major– Year in school

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Price premium in Exp. 1

$0$1$2$3$4$5$6$7$8$9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

VCX

CP

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Av. proportion of offsets sold to Conservancy Project in Exp. 1

0,0

0,2

0,4

0,6

0,8

1,0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Round

Self-interest

Other-interest

Control

30% line

Average

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Proportion of offsets sold to the Conservancy Project (Exp1)

Variable Model 1A Model 1B

Constant 1.094*** .340***

px_pc -.080*** -.009*

prop_cp(lag-1) .738***

d_other .060** .024d_self .002 .000d_rd10 .017 .002d_famfarm -.072*** -.017d_rural .054** .014d_business -.087*** -.023d_freshman -.099** -.029d_female -.010 -.013Empathy .123*** .039***Control -.134*** -.055***Autism -.052*** -.019Selfism -.048*** -.017**

Model: GLM (MLE)

Akaike Info criterion: Model 1A: 431.4Model 1B: -348.3

Sig: * 10%, ** 5%*** 1%

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Proportion of offsets sold to the Conservancy Project (Exp1)

Variable Model 1A Model 1B

Constant 1.094*** .340***

px_pc -.080*** -.009*

prop_cp(lag-1) .738***

d_other .060** .024d_self .002 .000d_rd10 .017 .002d_famfarm -.072*** -.017d_rural .054** .014d_business -.087*** -.023d_freshman -.099** -.029d_female -.010 -.013Empathy .123*** .039***Control -.134*** -.055***Autism -.052*** -.019Selfism -.048*** -.017**

Model: GLM (MLE)

Akaike Info criterion: Model 1A: 431.4Model 1B: -348.3

Sig: * 10%, ** 5%*** 1%

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Experiment 2

• Selling offsets– VCX– CP

• Rounds – 25:– Price decrease

– Price increase • Conditions/priming

– Other-interest– Self-interest– Control

• NO Psychological questions

• Demographics:– Rural/urban area– Farmer’s family– Gender– Major– Year in school

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Price dynamics in Exp. 2

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

1 3 5 7 9 11 13 15 17 19 21 23 25

VCX

CP

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

1 3 5 7 9 11 13 15 17 19 21 23 25

VCX

CP

Price increase

Price decrease

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Av. proportion of offsets sold to Conservancy Project in Exp. 2

0,0

0,2

0,4

0,6

0,8

1,0

1 3 5 7 9 11 13 15 17 19 21 23 25

Round

Av_PriceIncr

Av_PriceDecr

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Proportion of offsets sold to the Conservancy Project (Exp2)

Variable Model 2F Model 2G

Constant .449*** .190***

Price_CP .161*** .061***

Price_VCX -.130*** -.051***

Prop_cp_lag-1 .707***

d_other .001 .001

d_self -.073*** -.017

d_pr incr .018 -.002

d_pr prem_incr .036** -.074***

d_1st round .427***

d_25thround .327***

d_famfarm -.030* -.008

d_rural .070*** .023*

d_business .005 -.004

d_female .002 -.001

Model: GLM (MLE)

Akaike Info criterion: Model 2F: 733.8Model 2G: 428.2

Sig: * 10%, ** 5%*** 1%

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Proportion of offsets sold to the Conservancy Project (Exp2)

Variable Model 2F Model 2G

Constant .449*** .190***

Price_CP .161*** .061***

Price_VCX -.130*** -.051***

Prop_cp_lag-1 .707***

d_other .001 .001

d_self -.073*** -.017

d_pr incr .018 -.002

d_pr prem_incr .036** -.074***

d_1st round .427***

d_25thround .327***

d_famfarm -.030* -.008

d_rural .070*** .023*

d_business .005 -.004

d_female .002 -.001

Model: GLM (MLE)

Akaike Info criterion: Model 2F: 733.8Model 2G: 428.2

Sig: * 10%, ** 5%*** 1%

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Effect of psychological traits : Exp. 1 vs 2

Variable Model 1H Model 1I Model 2H Model 2I

Constant .649*** .080*** .578*** .170***

px_pc -.081*** -.005 -.205*** -.063***

Prop_cp_lag-1 .792*** .692***

d_other .062** .023 .012 .004

d_self .026 .009 -.056*** -.014

Akaike’s info criterion

588.5 -329.1 881.0 -196.0

Model: GLM (MLE)

Sig: * 10%, ** 5%*** 1%

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Effect of psychological traits : Exp. 1 vs 2

Variable Model 1H Model 1I Model 2H Model 2I

Constant .649*** .080*** .578*** .170***

px_pc -.081*** -.005 -.205*** -.063***

Prop_cp_lag-1 .792*** .692***

d_other .062** .023 .012 .004

d_self .026 .009 -.056*** -.014

Akaike’s info criterion

588.5 -329.1 881.0 -196.0

Model: GLM (MLE)

Sig: * 10%, ** 5%*** 1%

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Conclusions

• Environmental agencies can buy offsets at a lower-than-market price

• Increase in price premium of VCX relative to CP decreases the number of offsets sold to CP– Even with a Price premium of 300% a positive

amount of offsets is sold to CP

• Self-reflections on “who I am” and “how do I treat others” increase contributions to the environmental good

• Path dependency of selling behavior

Conclusions…• Support for the dual motive model:

– Subjects sought balance in their interests

– Subjects were willing to sacrifice in both domains of interest

– Priming stirred their rational consideration and reconsideration of which interests they would pursue

– Mutual tempering of interests leads to truly rational choice

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Thank you