The opportunity costs of conservation with deterministic and probabilistic degradation externalities
AbstractThis experimental study examines variations in the opportunity cost of conservation (the foregone private earnings from appropriation) in two linear appropriation games that include symmetric and asymmetric subject payoffs. In the first game, appropriation leads to deterministic degradation in the value of the commons. In the second game, appropriation leads to both deterministic and probabilistic catastrophic degradation, introducing endogenous uncertainty in the value of the opportunity cost of conserving the commons. The experimental design abstracts away from path-dependent group dynamics that allow for reputation building. Instead the design is built around a one-shot, within subject, decision setting in which there is no potential to observe others decisions or signal one’s own intentions. In summary, subjects systematically decrease appropriation the lower the opportunity cost of conservation, and in decision settings with asymmetric game parameters, subjects appear to react primarily to their own marginal incentives rather than others. Moreover, the addition of probabilistic degradation leads to further decreases in appropriation. These decreases, however, are not large enough to offset decreases in expected efficiency due to expected losses in the value of the commons.
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Bibliographic InfoPaper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2012-25.
Date of creation: Oct 2012
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More information through EDIRC
common-pool resources; asymmetry; cooperation; laboratory experiments;
Find related papers by JEL classification:
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- D3 - Microeconomics - - Distribution
- H4 - Public Economics - - Publicly Provided Goods
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-ENV-2012-11-11 (Environmental Economics)
- NEP-EXP-2012-11-11 (Experimental Economics)
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