The effect of leadership in a public bad experiment

With regard to global or regional environmental problems, do nations that take unilateral actions inspire other countries to curtail emissions? Using game theory, it has been shown that in a competitive situation, unilateral actions will both improve global welfare and lead to lower total emissions. For small nations, however, this effect is negligible. The earlier study explicitly leaves out the possibility that unilateral actions "might lead to similar behaviour from other countries." This possibility is investigated in the present study by the use of a novel design of a laboratory public bad experiment with a leader. Twelve groups of five subjects played the game twice, with two treatments. While the results of the no-leader treatment were consistent with previous public bad experiments, the new and interesting finding is that there is a significant effect of leadership. Followers invest on average 13 percent less in the public bad when there is a leader setting the good example as opposed to a situation with no leader. The project has been funded by the SAMRAM program under the Research Council of Norway.