1 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-Lincoln Chris Larimer, University of Northern Iowa IAREP/SABE Meeting at LUISS Rome, Italy September 3-6, 2008

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Theoretical Considerations 3

Self-interest Shared Other-interest Value Rational Choice Control Cognition Consciousness (Feelings) Affective Hedonism, e.g. hunger, sexual drive, pleasure and pain Affective Sympathy (“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 EgocentricEmpathetic

Self-interest Shared Other-interest Value Rational Choice Control Cognition Consciousness (Feelings) Affective Hedonism, e.g. hunger, sexual drive, pleasure and pain Affective Sympathy (“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 EgocentricEmpathetic

Self-interest Shared Other-interest Value Rational Choice Control Cognition Consciousness (Feelings) Affective Hedonism, e.g. hunger, sexual drive, pleasure and pain Affective Sympathy (“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 EgocentricEmpathetic

Sharing and Self-Sacrifice in Both Domains of Interest 7

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Two Environmental Economic Experiments 9

10 Background CO 2 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

11 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?

12 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

13 Price premium in Exp. 1

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

15 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**.024 d_self d_rd d_famfarm -.072***-.017 d_rural.054**.014 d_business -.087***-.023 d_freshman -.099**-.029 d_female Empathy.123***.039*** Control -.134***-.055*** Autism -.052***-.019 Selfism -.048***-.017** Model: GLM (MLE) Akaike Info criterion: Model 1A: Model 1B: Sig: * 10%, ** 5% *** 1%

16 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**.024 d_self d_rd d_famfarm -.072***-.017 d_rural.054**.014 d_business -.087***-.023 d_freshman -.099**-.029 d_female Empathy.123***.039*** Control -.134***-.055*** Autism -.052***-.019 Selfism -.048***-.017** Model: GLM (MLE) Akaike Info criterion: Model 1A: Model 1B: Sig: * 10%, ** 5% *** 1%

17 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

18 Price dynamics in Exp. 2 Price increase Price decrease

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

20 Proportion of offsets sold to the Conservancy Project (Exp2) Variable Model 2FModel 2G Constant.449***.190*** Price_CP.161***.061*** Price_VCX -.130***-.051*** Prop_cp_lag-1.707*** d_other.001 d_self -.073***-.017 d_pr incr d_pr prem_incr.036**-.074*** d_1 st round.427*** d_25 th round.327*** d_famfarm -.030* d_rural.070***.023* d_business d_female Model: GLM (MLE) Akaike Info criterion: Model 2F: Model 2G: Sig: * 10%, ** 5% *** 1%

21 Proportion of offsets sold to the Conservancy Project (Exp2) Variable Model 2FModel 2G Constant.449***.190*** Price_CP.161***.061*** Price_VCX -.130***-.051*** Prop_cp_lag-1.707*** d_other.001 d_self -.073***-.017 d_pr incr d_pr prem_incr.036**-.074*** d_1 st round.427*** d_25 th round.327*** d_famfarm -.030* d_rural.070***.023* d_business d_female Model: GLM (MLE) Akaike Info criterion: Model 2F: Model 2G: Sig: * 10%, ** 5% *** 1%

22 Effect of psychological traits : Exp. 1 vs 2 VariableModel 1HModel 1IModel 2HModel 2I Constant.649***.080***.578***.170*** px_pc-.081*** ***-.063*** Prop_cp_lag-1.792***.692*** d_other.062** d_self ***-.014 Akaike’s info criterion Model: GLM (MLE) Sig: * 10%, ** 5% *** 1%

23 Effect of psychological traits : Exp. 1 vs 2 VariableModel 1HModel 1IModel 2HModel 2I Constant.649***.080***.578***.170*** px_pc-.081*** ***-.063*** Prop_cp_lag-1.792***.692*** d_other.062** d_self ***-.014 Akaike’s info criterion Model: GLM (MLE) Sig: * 10%, ** 5% *** 1%

24 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 25

26 Thank you