Communication and Co-operation in a Common-Pool Resource Dilemma: A Field Experiment

One tenet of classical, rational choice theory as used in non-cooperative game theory is that all players use the same model of rationality for themselves as well as for all other players. The assumption of homogeneous, self-interested actors helps theorists to model how individuals would make choices. One justification for positing homogeneous, rational, egoistic actors has been evolutionary theory (Dawkins, 1976). That is, even if individuals tried out different ways of behaving, only those who made decisions consistent with rational egoistic decisions would maximize returns. In a highly competitive environment, those who maximize returns are more likely to survive in the long run. Long ago, Armen Alchian (1950) made a cogent theoretical argument that, in a highly competitive market, selection pressure would weed out those market participants who did not maximize profits. Extensive experimental studies of behaviour in competitive market settings have supported the use of the classical, rational choice model as the only model of individual choice needed in this setting to make empirically supported predictions (Smith, 1962; Plott, 1986). Thus, continuing to use the classical model when analysing competitive markets has both strong theoretical and empirical support.