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Cooperation in the Commons with Unobservable Actions

  • Nori Tarui

    ()

    (Department of Economics, University of Hawaii at Manoa)

  • Charles Mason

    ()

    (Department of Economics and Finance, University of Wyoming)

  • Stephen Polasky

    ()

    (Department of Applied Economics, University of Minnesota)

  • Greg Ellis

    ()

    (Department of Economics, University of Washington)

We model a dynamic common property resource game with unobservable actions and non-linear stock dependent costs. We propose a strategy profile that generates a worst perfect equilibrium in the punishment phase, thereby supporting cooperation under the widest set of conditions. We show under what set of parameter values for the discount rate, resource growth rate, harvest price, and the number of resource users, this strategy supports cooperation in the commons as a subgame perfect equilibrium. The strategy profile that we propose, which involves harsh punishment after a defection followed by forgiveness, is consistent with human behavior observed in experiments and common property resource case studies.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_07-11.pdf
File Function: First version, 2007
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Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200711.

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Length: 32 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:hai:wpaper:200711
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