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Consistent conjectures in a dynamic model of non-renewable resource management

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  • Nicolas Querou

    (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, CNRS - Centre National de la Recherche Scientifique)

  • Mabel Tidball

    (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

We consider a model of non-renewable resource extraction where players do not know their opponents' utility functions and form conjectures on the behavior of others. Two forms of beliefs are introduced, one based on the state of the resource, the other on this state and on the others' strategy (their consumption). We focus on consistent equilibria, where beliefs must be consistent with observed past plays. Closed form expressions of the optimal policies are derived. Comparisons are made with the full information benchmark case. With strategy and state based beliefs, the agents may behave more (respectively, less) aggressively than in the non-cooperative benchmark depending on the initial consumption level. When initial consumption is low, the optimal consumption path lies below that of the cooperative benchmark. We conclude the analysis by discussing the impact of public policies on the agents' choice of consumption patterns, and the robustness of the results for the case of renewable resources.

Suggested Citation

  • Nicolas Querou & Mabel Tidball, 2014. "Consistent conjectures in a dynamic model of non-renewable resource management," Post-Print hal-01123096, HAL.
    • Handle: RePEc:hal:journl:hal-01123096
    DOI: 10.1007/s10479-012-1114-5
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    Cited by:

    1. Paulo Brito & Bipasa Datta & Huw Dixon, 2011. "The evolution of mixed conjectures in the rent-extraction game," Discussion Papers 11/06, Department of Economics, University of York.
    2. Salem Nechi & Belaid Aouni & Zouhair Mrabet, 2020. "Managing sustainable development through goal programming model and satisfaction functions," Annals of Operations Research, Springer, vol. 293(2), pages 747-766, October.

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