IDEAS home Printed from https://ideas.repec.org/p/hal/wpceem/hal-02316729.html
   My bibliography  Save this paper

On the modeling and testing of groundwater resource models

Author

Listed:
  • Murielle Djiguemde

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Dimitri Dubois

    () (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Alexandre Sauquet

    () (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Mabel Tidball

    () (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

Abstract

Economists have been attempting to take on the optimal management of groundwater for many decades, initially through static models, and since the 1970's through a dynamic framework. Since then, several attempts have been made to test dynamic models through laboratory experiments. Yet formulating and testing these models raises several challenges that we attempt to tackle in this study by testing a very simple dynamic groundwater extraction model in a laboratory experiment. We propose a full characterization of the theoretical solutions, taking into account economic constraints. In the experiment we mimic continuous time by allowing subjects to make their extraction decisions whenever they wish, with an actualization and updating the data (resource and payoffs) every second. The infinite horizon is simulated through the computation of payoffs, as if time were endless. To get around the weaknesses of the widely used Mean Squared Deviation (MSD) statistic and classify individual behavior as myopic, feedback or optimal, we combine the MSD with Ordinary Least Squares (OLS) regressions and time series treatments. Results show that a significant percentage of agents are able to adopt an optimal extraction path, that few agents should be considered truly myopic, and that using the MSD alone to classify agents would be misleading for about half of the study participants.

Suggested Citation

  • Murielle Djiguemde & Dimitri Dubois & Alexandre Sauquet & Mabel Tidball, 2019. "On the modeling and testing of groundwater resource models," CEE-M Working Papers hal-02316729, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
  • Handle: RePEc:hal:wpceem:hal-02316729
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-02316729
    as

    Download full text from publisher

    File URL: https://hal.umontpellier.fr/hal-02316729/document
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Oprea, Ryan & Charness, Gary & Friedman, Daniel, 2014. "Continuous time and communication in a public-goods experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 212-223.
    2. Tsutsui, Shunichi & Mino, Kazuo, 1990. "Nonlinear strategies in dynamic duopolistic competition with sticky prices," Journal of Economic Theory, Elsevier, vol. 52(1), pages 136-161, October.
    3. Simon, Leo K & Stinchcombe, Maxwell B, 1989. "Extensive Form Games in Continuous Time: Pure Strategies," Econometrica, Econometric Society, vol. 57(5), pages 1171-1214, September.
    4. Tasneem, Dina & Engle-Warnick, Jim & Benchekroun, Hassan, 2017. "An experimental study of a common property renewable resource game in continuous time," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 91-119.
    5. Santiago Rubio & Begoña Casino, 2003. "Strategic Behavior and Efficiency in the Common Property Extraction of Groundwater," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 73-87, September.
    6. Colombo, Luca & Labrecciosa, Paola, 2015. "On the Markovian efficiency of Bertrand and Cournot equilibria," Journal of Economic Theory, Elsevier, vol. 155(C), pages 332-358.
    7. Phoebe Koundouri, 2004. "Current Issues in the Economics of Groundwater Resource Management," Journal of Economic Surveys, Wiley Blackwell, vol. 18(5), pages 703-740, December.
    8. John Hey & Tibor Neugebauer & Abdolkarim Sadrieh, 2009. "An Experimental Analysis of Optimal Renewable Resource Management: The Fishery," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(2), pages 263-285, October.
    9. Rowat, Colin, 2007. "Non-linear strategies in a linear quadratic differential game," Journal of Economic Dynamics and Control, Elsevier, vol. 31(10), pages 3179-3202, October.
    10. Eli Feinerman & Keith C. Knapp, 1983. "Benefits from Groundwater Management: Magnitude, Sensitivity, and Distribution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(4), pages 703-710.
    11. Charles N. Noussair & Daan van Soest & Jan Stoop, 2015. "Cooperation in a Dynamic Fishing Game: A Framed Field Experiment," American Economic Review, American Economic Association, vol. 105(5), pages 408-413, May.
    12. Herr, Andrew & Gardner, Roy & Walker, James M., 1997. "An Experimental Study of Time-Independent and Time-Dependent Externalities in the Commons," Games and Economic Behavior, Elsevier, vol. 19(1), pages 77-96, April.
    13. Dina Tasneem & Jim Engle-Warnick & Hassan Benchekroun, 2019. "Sustainable management of renewable resources: an experimental investigation in continuous time," Applied Economics, Taylor & Francis Journals, vol. 51(35), pages 3804-3833, July.
    14. Daniel Friedman & Ryan Oprea, 2012. "A Continuous Dilemma," American Economic Review, American Economic Association, vol. 102(1), pages 337-363, February.
    15. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, January.
    16. Jordan F. Suter & Joshua M. Duke & Kent D. Messer & Holly A. Michael, 2012. "Behavior in a Spatially Explicit Groundwater Resource: Evidence from the Lab," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1094-1112.
    17. Ailin Leng & Lana Friesen & Kenan Kalayci & Priscilla Man, 2018. "A minimum effort coordination game experiment in continuous time," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 549-572, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tasneem, Dina & Engle-Warnick, Jim & Benchekroun, Hassan, 2017. "An experimental study of a common property renewable resource game in continuous time," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 91-119.
    2. Javier Frutos & Guiomar Martín-Herrán, 2018. "Selection of a Markov Perfect Nash Equilibrium in a Class of Differential Games," Dynamic Games and Applications, Springer, vol. 8(3), pages 620-636, September.
    3. Guilfoos, Todd & Pape, Andreas D. & Khanna, Neha & Salvage, Karen, 2013. "Groundwater management: The effect of water flows on welfare gains," Ecological Economics, Elsevier, vol. 95(C), pages 31-40.
    4. Schüssler, Katharina & Schüssler, Michael & Mühlbauer, Daniel, 2018. "Individual Differences and Contribution Sequences in Threshold Public Goods," Rationality and Competition Discussion Paper Series 88, CRC TRR 190 Rationality and Competition.
    5. Wegmann, J., 2018. "Addressing the institutional challenges of groundwater management in areas of rapid urbanization," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277268, International Association of Agricultural Economists.
    6. Agnieszka Wiszniewska-Matyszkiel & Marek Bodnar & Fryderyk Mirota, 2015. "Dynamic Oligopoly with Sticky Prices: Off-Steady-state Analysis," Dynamic Games and Applications, Springer, vol. 5(4), pages 568-598, December.
    7. Raphaël Soubeyran & Mabel Tidball & Agnes Tomini & Katrin Erdlenbruch, 2015. "Rainwater Harvesting and Groundwater Conservation: When Endogenous Heterogeneity Matters," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 19-34, September.
    8. Phoebe Koundouri, "undated". "Current issues in the economics of groundwater resource management," DEOS Working Papers 0402, Athens University of Economics and Business.
    9. Maria Bigoni & Marco Casari & Andrzej Skrzypacz & Giancarlo Spagnolo, 2015. "Time Horizon and Cooperation in Continuous Time," Econometrica, Econometric Society, vol. 83, pages 587-616, March.
    10. Msangi, Siwa, 2005. "Measuring the Gains to Groundwater Management with Recursive Utility," 2005 Annual meeting, July 24-27, Providence, RI 19212, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Lambertini, Luca & Mantovani, Andrea, 2016. "On the (in)stability of nonlinear feedback solutions in a dynamic duopoly with renewable resource exploitation," Economics Letters, Elsevier, vol. 143(C), pages 9-12.
    12. Rowat, Colin, 2007. "Non-linear strategies in a linear quadratic differential game," Journal of Economic Dynamics and Control, Elsevier, vol. 31(10), pages 3179-3202, October.
    13. Engelbert Dockner & Florian Wagener, 2014. "Markov perfect Nash equilibria in models with a single capital stock," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(3), pages 585-625, August.
    14. L. Lambertini, 2015. "Managerial delegation in a dynamic renewable resource oligopoly," Working Papers wp990, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Colombo, Luca & Labrecciosa, Paola, 2019. "Stackelberg versus Cournot: A differential game approach," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 239-261.
    16. Liu, Zhuo & Suter, Jordan F. & Messer, Kent D. & Duke, Joshua M. & Michael, Holly A., 2014. "Strategic entry and externalities in groundwater resources: Evidence from the lab," Resource and Energy Economics, Elsevier, vol. 38(C), pages 181-197.
    17. Ailin Leng & Lana Friesen & Kenan Kalayci & Priscilla Man, 2018. "A minimum effort coordination game experiment in continuous time," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 549-572, September.
    18. Gunnar Brandt & Micaela M Kulesz & Dennis Nissen & Agostino Merico, 2017. "OGUMI—A new mobile application to conduct common-pool resource experiments in continuous time," PLOS ONE, Public Library of Science, vol. 12(6), pages 1-14, June.
    19. Michele Bisceglia, 2020. "Optimal taxation in a common resource oligopoly game," Journal of Economics, Springer, vol. 129(1), pages 1-31, January.
    20. Louis Sears & David Lim & C.-Y. Cynthia Lin Lawell, 2018. "The Economics of Agricultural Groundwater Management Institutions: The Case of California," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 1-21, July.

    More about this item

    Keywords

    Experimental Economics; Renewable Resources; Continuous Time; Dynamic Optimization; Differential Games; Applied Econometrics.;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpceem:hal-02316729. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laurent Garnier). General contact details of provider: http://edirc.repec.org/data/lamplfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.