Avoiding severe environmental consequences: evidence on the role of loss avoidance and risk attitudes

Previous studies have found that individuals select away from equilibria perceived as leading to losses, The current paper examines whether individuals would increase the rate at which they internalize the costs of a negative externality in order to avoid incurring losses, The findings indicate that incurring losses did not result in the subject's overcoming the social dilemma. The participants' responses varied according to their risk attitudes, with risk-seeking subjects increasing their internalization rates but risk-averse subjects decreased their rates. It is argued that these findings cast doubt upon the notion that individuals will be willing to unilaterally engage in actions necessary to avoid severe environmental problems, (C) 1999 Elsevier Science B.V, All rights reserved.