IGIDR Working Paper: Honor and Stigma in Mechanisms for Environmental Protection

NO: WP-2016-017

AUTHOR: Prasenjit Banerjee, Rupayan Pal, and Jason F. Shogren

TITLE: Honor and Stigma in Mechanisms for Environmental Protection


Honor and stigma play a role in environmental protection. Environmental honors are bestowed on people and firms who go out of their way to do right by the environment. Similarly, environmental stigma is put on people or firms who are publicly taken to task for their poor environmental record. We design a voluntary incentive mechanism by incorporating honor and stigma to induce heterogeneous firms to protect the environment at less cost. We encounter a motivational costs incurred by the green firm-it loses its leadership rents. Our result suggests (i) an additional social reward is needed for a green firm; and (ii) the brown firm may sacrifice information rent.

Keywords : Mechanism, reputation, environmental risk, honor, stigma, social norm

JEL Code: D03, Q52, Q58

Weblink: http://www.igidr.ac.in/pdf/publication/WP-2016-017.pdf