Ouvrard, Benjamin and Stenger, Anne (2020) Informational nudges and public goods in networks. Journal of Environmental Economics and Policy, 9 (3). pp. 281-303.

Abstract

We present a model of voluntary contributions for a local public good, with individuals in a fixed network. We consider the introduction of an informational nudge, and model individuals' reaction to the nudge using a moral cost function. Regardless of the regulator's level of information, an informational nudge may induce higher levels of aggregate contributions in circle and complete networks, and reduces strategic uncertainty, as long as individuals' sensitivity to the nudge is high enough (contrary to the star and line networks). If in star and line networks agents' sensitivity to the nudge also matters, the regulator's degree of knowledge regarding each individual position in the network becomes crucial, as the efficiency of our nudge is lowered under incomplete information (it is not possible to send personalized information to each agent). Our main conclusion is therefore that a nudge policy should target specific individuals (those being the most sensitive to the nudge or having the highest interest for the public good) in specific networks (those in which each agent should contribute the same). We finally discuss some ethical concerns related to nudge implementation because of their potential for manipulation.