Work in progress

Abstract: This paper examines how financial return, risk, and environmental impact jointly shape portfolio choices in a lab-in-the-field experiment involving more than 15{,}000 decisions made by finance professionals and university students. Participants repeatedly allocated budgets among green, neutral, and brown assets that differed in expected return and risk. Asset color represented real environmental externalities, operationalized as actual donations either to a pro-environmental NGO (green) or to a fossil fuel association (brown). Three robust findings emerge. First, environmental framing alters financial sensitivities: participants react more strongly to return changes in greener assets, while risk sensitivity remains unaffected by asset color. In high-risk contexts, portfolios shift toward higher-return brown assets, indicating that standard return–risk trade-offs dominate when financial risk rises.  Second, preferences are asymmetric—aversion to brown assets outweighs attraction to green ones—consistent with loss aversion and negativity bias. Third, both professionals and students exhibit pro-environmental tendencies, though for distinct reasons: professionals’ allocations reflect trading experience and job-related heuristics, whereas students’ choices are more strongly linked to pro-social and environmental attitudes and respond more to both pecuniary and moral incentives.

Abstract: We experimentally evaluate the behavioral foundations of sustainable investing by testing the Gasser et al. (2017) extension of Markowitz (1952), which augments utility with an environmental term. In a lab-in the-field experiment with 66 finance professionals and a student replication (N = 103), participants allocate portfolios among assets varying in risk, return, and environmental externalities. We first confirm separability: risk assessments and return correlations are unaffected by an asset’s environmental “color,” indicating that moral and financial attributes enter utility independently. Yet preferences are non-linear: marginal utility is decreasing, and aversion to brown assets is stronger than attraction to green assets. This generates incomplete diversification, few corner solutions, and systematic deviations from mean–variance optimization. We also document a robust return–impact trade-off: investors willingly forgo return to avoid brown assets but demand higher premia to shift toward green assets. The sensitivity to returns is asymmetric: participants penalize brown assets more strongly than they reward green ones. Finance professionals display more stable and internally consistent preferences than students, whose allocations vary more with return differentials. Results reveal that utilities with additively separated attributes provide a correct model of prefrences. ESG motives are separable but non-linear, shaped by a predominance of harm aversion over pro-environmental enthusiasm. 

Abstract: Future generations have no agency in today’s decisions, making their well-being a defining challenge of our time. Climate change, biodiversity loss, and resource depletion all depend on trade-offs between immediate gains and long-term sustainability. These dilemmas are often attributed to shortsightedness. We show instead that the critical obstacle lies within generations themselves: coordination failures among contemporaries can undermine sustainability even when individuals care about the future. Using a lab-in-the-field intergenerational goods game with a threshold-based regeneration rule, we compare settings with a single decision maker per generation to ones with three contemporaries deciding simultaneously without communication. When individuals act alone, resources are almost always preserved; when contemporaries must coordinate, conservation collapses. Our models explain this pattern by combining intergenerational altruism with beliefs about others’ restraint: pessimistic expectations erode altruistic motives, driving overextraction. These insights have direct implications for climate governance and natural resource management, where failures in coordination today can be as detrimental as lack of concern for the future

Abstract: We use laboratory and lab-in-the-field experiments to evaluate policy interventions aimed at curbing the overexploitation of groundwater in southern Tunisia. A framed field experiment, based on a dynamic common-pool resource (CPR) model with both static and dynamic externalities, captures the increasing costs of extraction due to current and past overuse. Treatments were designed in collaboration with local stakeholders, reflecting real-world constraints such as weak enforcement and limited resources. We test two governance tools---Stakeholder Communication and Expert Advice---against a laissez-faire control, with and without a payoff simulator. Results show that Expert Advice is the most effective at reducing extraction, especially in the field setting, underscoring the value of credible, external guidance in CPR management.

Abstract: We study experimentally two variants of the beauty contest game (BCG+ and BCG-, thereafter) with an interior equilibrium. Subjects choose an integer number between 1 and 100. The winner is the one whose chosen number is closest to 2/3×(mean+30) in BCG+ or 100-2/3×mean in BCG-. For both games, the unique equilibrium, assuming IEWDS, is 60. The key difference between the two elimination processes is alternation. Under positive feedback elimination occurs only on one side of the equilibrium point, either the upper side or the lower side, depending at which extremity of the interval the reasoning process is initiated. In contrast, under negative feedback, elimination alternates on both sides of the equilibrium point, whatever the extremity that is chosen as the starting point. We use eye-tracking to identify whether subjects rely on one-sided elimination under BCG+ and two-sided elimination with alternation under BCG-.

Abstract: We assess the impact of signed environmental externalities on individual portfolio decisions in a lab-in-the-field experiment on finance professionals and students. Participants are prone to accept lower returns for positive environmental impact but will not bear increased risk. They show asymmetric pro-environmental preferences depending on the sign of the externality. Finance professionals are more pro-environment than students, particularly regarding positive externalities, and less influenced by a ranking signal about environmental performance. Control tasks show that experimental measures of pro-social and environmental preferences are significant predictors for students, while actual market practices for professionals explain a significant part of professionals portfolio composition.

This paper investigates the effect of an additive unfair background risk on the optimal donation behavior of a purely altruistic decision-maker in

the dictator game. Assuming both the dictator and the recipient face this background risk, and that the dictator is risk-vulnerable, we find that the

presence of background risk reduces the deviation of the optimal donation from an equal split. This outcome holds whether the dictator’s fairness

is evaluated ex-ante or ex-post, offering new insights into the implications of risk vulnerability.

Abstract: We study theoretically and experimentally the approval mechanism (Masuda et al., 2013, 2014) in the case of a three-player voluntary contribution game with the minimum disapproval benchmark. The three-player game raises the issue of aggregating approval votes. We compare the unanimity and the majority approval rules. Backward elimination of weakly dominated strategies predicts null contributions under the majority rule and any contribution vector under the unanimity rule. The experimental results show that the approval mechanism is less efficient in three-player than in two-player voluntary contribution games. Furthermore, the unanimity rule is more effective at increasing contributions than the majority rule. Overall, our results suggest that the efficiency of the AM is mitigated in the case of three-player public goods games.

Abstract: 

We examine how persistent exposure to volcanic hazards influences risk tolerance

and social preferences. Our lab-in-the-field experiment took place near Mount Semeru

in East Java, Indonesia, comparing villagers in high-risk areas exposed to eruptions

and lahars with residents from nearby lower-risk areas. During the data collection

period, a major eruption in December 2021 created a natural experiment, allowing us

to study behavioral responses to both background risk and a realized disaster event.

Participants engaged in incentivized tasks measuring risk tolerance, altruism, trust,

reciprocity, and cooperation, complemented by detailed survey data. We find that

persistent exposure to volcanic hazards reduces risk tolerance without affecting social

preferences. In contrast, the eruption significantly increased prosocial behaviors across

multiple domains, though its impact on risk attitudes became negligible once social

preferences were controlled for. Finally, prior experience with volcanic episodes lowers

altruism but does not affect other social preferences or risk tolerance.