Environmental care and morality: An economic model with heterogeneous agents

Some individuals voluntarily engage in costly pro-environmental actions although their efforts have limited direct benefits. This paper proposes a novel economic model with heterogeneous agents explaining why. Each agent has a homo moralis type of preference, which combines selfishness and morality. Morality is modeled here as the payoff an agent receives if all other agents act like her. Our model builds on extant literature showing that homo moralis preferences have an evolutionary advantage to better evaluate the behavioral motives of agents. Shedding light on how people respond not only to economic but also moral incentives, we contribute to the ongoing policy debate on the design of efficient environmental policies.