Sanctions and international interaction improve cooperation to avert climate change.

Imposing sanctions on non-compliant parties to international agreements is advocated as a remedy for international cooperation failure. Nevertheless, sanctions are costly, and rational choice theory predicts their ineffectiveness in improving cooperation. We test sanctions effectiveness experimentally in international collective-risk social dilemmas simulating efforts to avoid catastrophic climate change. We involve individuals from countries where sanctions were shown to be effective (Germany) or ineffective (Russia) in increasing cooperation. Here, we show that, while this result still holds nationally, international interaction backed by sanctions is beneficial. Cooperation by low cooperator groups increases relative to national cooperation and converges to the levels of high cooperators. This result holds regardless of revealing other group members' nationality, suggesting that participants' specific attitudes or stereotypes over the other country were irrelevant. Groups interacting under sanctions contribute more to catastrophe prevention than what would maximize expected group payoffs. This behaviour signals a strong propensity for protection against collective risks.

The social cost of contacts: Theory and evidence for the first wave of the COVID-19 pandemic in Germany.

Building on the epidemiological SIR model, we present an economic model with heterogeneous individuals deriving utility from social contacts creating infection risks. Focusing on social distancing of individuals susceptible to an infection we theoretically characterize the gap between private and social cost of contacts. Our main contribution is to quantify this gap by calibrating the model with unique survey data from Germany on social distancing and impure altruism from the beginning of the COVID-19 pandemic. The optimal policy is to drastically reduce contacts at the beginning to almost eradicate the epidemic and keep them at levels that contain the pandemic at a low prevalence level. We find that also in laissez faire, private protection efforts by forward-looking, risk averse individuals would have stabilized the epidemic, but at a much higher prevalence of infection than optimal. Altruistic motives increase individual protection efforts, but a substantial gap to the social optimum remains.