No Man is an Island: Social Coordination and the Environment

Humans are fundamentally social. Social activities require coordination, possibly leading to multiple equilibria in the form of self-reinforcing patterns of herd behavior. When alternative equilibria differ substantially with respect to environmental damage, they represent virtuous and vicious cycles from an environmental perspective. Such cycles can be sustained by network effects, social pressure to conform, or other mechanisms directly or indirectly yielding coordination benefits. Breaking the vicious cycles can be an important task for environmental policies. I present a stylized model of social coordination with environmental externalities, using it to discuss how environmental policies may help agents coordinate in more environment-friendly ways.