Effects of personal carbon allowances on decision-making: evidence from an experimental simulation

Abstract

Behavioural influences of personal carbon trading (PCT) beyond those anticipated by pure price effects have been a theoretically attractive, yet empirically elusive, feature of such schemes. Computer-based simulation is used to examine the effects of participants' decisions on their personal carbon allocations within a PCT context. Evidence is presented about participants' tendencies to make more energy-conserving decisions as a consequence of attending to a restrictive and diminishing carbon allowance—independent of other financial and carbon cost information provided—suggesting that a form of ‘carbon budgeting’ is occurring. Further measurements indicate that the extent of carbon reduction achieved within the simulated PCT framework varies according to pro-environmental attitudes. Evidence is also presented that the size of participants' footprints correlates inversely with support for PCT; and that proenvironmental attitudes correlate positively with support for PCT. The advantages and drawbacks of using simulations for examining behavioural responses to PCT are discussed.