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"Follow the Data" What Data Says About Real-world Behavior in Commons Problems

Author

Listed:
  • Caleb M. Koch

    (Department of Humanities, Social and Political Sciences, Eidgen'ssische Technische Hochschule Z'rich)

  • Heinrich H. Nax

    (Department of Humanities, Social and Political Sciences, Eidgen'ssische Technische Hochschule Z'rich)

Abstract

We test the game-theoretic foundations of common-pool resources using an individual-level dataset of groundwater usage that accounts for 3% of US irrigated agriculture. Using necessary and sufficient revealed preference tests for dynamic games, we find: (i) a rejection of the standard game- theoretic arguments based on strategic substitutes, and instead (ii) support for models building on reciprocity-like behavior and strategic complements. By estimating strategic interactions directly, we "nd that reciprocity-like interactions drive behavior more than market and climate trends. Taken together, we take a step toward developing more realistic models to understand groundwater usage, and related issues pertaining to tragedy of the commons and commons governance.

Suggested Citation

  • Caleb M. Koch & Heinrich H. Nax, 2019. ""Follow the Data" What Data Says About Real-world Behavior in Commons Problems," Cowles Foundation Discussion Papers 2198, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2198
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    Keywords

    Common-pool resources; US agriculture; Groundwater; Dynamic game theory; Revealed preferences; Panel data; Identification;
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