Anticipating moral hazard undermines climate mitigation in an experimental geoengineering game

Geoengineering is sometimes touted as a partial solution to climate change but will only be successful in conjunction with other mitigation strategies. This creates a potential for a "moral hazard": If people think geoengineering alone will mitigate climate change, they may become overly optimistic and reduce support for other necessary mitigation efforts. We test this in a series of economic games where players in groups must prevent a simulated climate disaster. One player, the "policymaker," decides whether to implement geo-engineering. The rest are "citizens" who decide how much to contribute to incremental mitigation efforts. We find that citizens contribute to mitigation even when the policymaker uses geoengineering. Despite this, poli-cymakers expect that citizens will engage in moral hazard. As a consequence, policymakers do not use geo-engineering even though everyone would be better off if they did so. Anticipating moral hazard undermines mitigation even though moral hazard itself does not.