Maybe Compensations

To decelerate climate change, business activities as well as individual consumer decisions should strive for net zero emissions. All approaches towards net zero emissions rest on the three pillars Avoid, Reduce, and Compensate. While this order should certainly reflect a priority, Avoid and Reduce (which are often summarized under “insetting”) require rather fundamental changes to business activities and consumption habits. In contrast, Compensate (which is often called “offsetting”) is implemented by funding environmental projects. For instance, a logistics company might compensate the carbon emissions caused by its vehicles by planting trees or building biogas facilities which reduce carbon emissions elsewhere.

But planting trees or building biogas facilities always comes at a cost. That is, compensating carbon emissions associated with an activity, product, or service will inevitably add to its costs. However, some consumers will not be willing or able to pay a corresponding price premium. Therefore, the challenge lies in developing a way to reduce the costs to consumers without simply transferring the burden to businesses. Previous research on the “Maybe Favor” (Zürn et al., 2021) might show a way to meet this challenge.

Maybe Favors are good deeds that may not have to be carried out eventually. For instance, if a colleague asks you to attend a meeting in her place – but only if she cannot make it herself. Existing findings indicate that Maybe Favors get more good deeds done, even after taking into account that some maybe favors are never carried out. For instance, announcing to randomly cancel 5% of confirmed charitable donations increased the total amount of donations by on average 18% (already including deliberately waiving 5% of the donations!).

In this research project, we apply the idea of the Maybe Favor to the domain of carbon compensations. We expect that reducing the expected price of compensations by randomly cancelling some confirmed compensations will overall lead to more compensations and contribute to the goal of climate neutrality.

• Climate neutrality can be achieved by avoiding, reducing and compensating emissions
• High costs of compensations reduce consumers willingness to compensate
• We test a novel approach to reduce compensation costs for consumers without reducing sellers’ margins

• Zürn, M. K., Gerten, J., & Topolinski, S. (2021). Maybe favors: How to get more good deeds done. Journal of Experimental Psychology: Applied, 27(3), 503.
• Thaler, R. H., & Sunstein, C. R. (2021). Nudge: The final edition. Yale University Press.
• Berger, S., Kilchenmann, A., Lenz, O., Ockenfels, A., Schlöder, F., & Wyss, A. M. (2022). Large but diminishing effects of climate action nudges under rising costs. Nature Human Behaviour, 6(10), 1381-1385.