Going green to be seen: the case of biodiversity protection on farmland.
Abstract
We provide a framework to analyze the non-separability of self-interest and endogenous social preferences in the context of voluntary biodiversity protection on farmland. A farmer's social reward (esteem/disesteem) interacts with the proportion of the peer group taking up the conservation practice. We use the framework to address how to incentivize different types of farmers ('green' or brown') under asymmetric information about their true motivation. It follows that under perfect Bayesian equilibrium, the regulator can separate out the farmer types by monitoring their (observable) conservation activities and that a status reward is needed to keep 'green' farmers interested.