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Strategic Exploitation of a Common-Property Resource under Uncertainty

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We study the impact of uncertainty on the strategies and dynamics of symmetric noncooperative games among players who exploit a non-excludable resource that reproducesunder uncertainty. We focus on a particular class of games that deliver a unique Nash equilibrium in linear-symmetric strategies of resource exploitation. We show that, for this class of games, the tragedy of the commons is always present. For various changes in the riskiness of the random primitives of the model we provide general characterizations of features of the model that explain links between the degree of riskiness and strategic exploitation decisions. Finally, we provide a specific example that demonstrates the usefulness of our general results and, within the specific example, we study cases where increases in risk amplify or mitigate the tragedy of the commons.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0703.

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Date of creation: Jun 2007
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Handle: RePEc:vie:viennp:0703

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Web page: http://www.univie.ac.at/vwl

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Cited by:
  1. Eric Fesselmeyer & Marc Santugini, 2011. "Strategic Exploitation of a Common Resource under Environmental Risk," Cahiers de recherche 1131, CIRPEE.
  2. Koulovatianos, Christos & Mirman, Leonard J. & Santugini, Marc, 2009. "Optimal growth and uncertainty: Learning," Journal of Economic Theory, Elsevier, vol. 144(1), pages 280-295, January.
  3. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
  4. Agbo, Maxime, 2014. "Strategic exploitation with learning and heterogeneous beliefs," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 126-140.
  5. Hiro Sakamoto, 2013. "A dynamic common-property resource problem with potential regime shifts," Discussion papers e-12-012, Graduate School of Economics Project Center, Kyoto University.

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