Clean up your own mess: An experimental study of moral responsibility and efficiency

Although market-based environmental policy instruments feature prominently in economic theory and are widely employed, they often face public resistance. We argue that such resistance may be driven by moral responsibility, where citizens prefer to tackle the environmental problems that they have caused by themselves, rather than delegating the task to others by means of a market mechanism. Using a laboratory experiment that isolates moral responsibility from alternative explanations, we show that moral responsibility induces participants to take inefficient actions that reduce the earnings of the whole group of participants. We discuss the implications of this finding for the design and implementation of environmental policies.