Voluntary cooperation for mitigating collective-risk under spatial externalities

Abstract

Promoting public cooperation has become a challenge for authorities in the pandemic era. We develop a novel risk mitigation game laboratory experiment that explores the coordination and voluntary cooperation problems under spatial risk externalities, where the effect of an agent's effort depends on the spatially weighted efforts of all local and global members. We show that tax-like centralized interventions are effective in improving collective-risk mitigation, social welfare, and equality among members. Then, our result illustrates that the effectiveness of revealing information about others’ behavior on risk mitigation depends on intervention degrees and whether mitigation choices are strategic complements or substitutes.