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The opportunity costs of conservation with deterministic and probabilistic degradation externalities

Author

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  • Esther Blanco

    ()

  • Maria Claudia Lopez

    ()

  • James M. Walker

    ()

Abstract

This 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.

Suggested Citation

  • Esther Blanco & Maria Claudia Lopez & James M. Walker, 2012. "The opportunity costs of conservation with deterministic and probabilistic degradation externalities," Working Papers 2012-25, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2012-25
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    File URL: https://www2.uibk.ac.at/downloads/c4041030/wpaper/2012-25.pdf
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    References listed on IDEAS

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    1. R. M Isaac & J. Walker & A. Williams, 2010. "Group Size and the Voluntary Provision of Public Goods: Experimental Evidence Utilizing Very Large Groups," Levine's Working Paper Archive 11, David K. Levine.
    2. Ernesto Reuben & Arno Riedl, 2009. "Public Goods Provision and Sanctioning in Privileged Groups," Journal of Conflict Resolution, Peace Science Society (International), pages 72-93.
    3. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    4. Hackett Steven & Schlager Edella & Walker James, 1994. "The Role of Communication in Resolving Commons Dilemmas: Experimental Evidence with Heterogeneous Appropriators," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 99-126, September.
    5. Urs Fischbacher & Simeon Schudy & Sabrina Teyssier, 2014. "Heterogeneous reactions to heterogeneity in returns from public goods," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(1), pages 195-217, June.
    6. Ledyard, John O., "undated". "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
    7. Ernesto Reuben & Arno Riedl, 2009. "Public Goods Provision and Sanctioning in Privileged Groups," Journal of Conflict Resolution, Peace Science Society (International), pages 72-93.
    8. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, pages 1-36.
    9. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
    10. Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 351-366, April.
    11. Kenneth Chan & Stuart Mestelman & Robert Moir & R. Muller, 1999. "Heterogeneity and the Voluntary Provision of Public Goods," Experimental Economics, Springer;Economic Science Association, vol. 2(1), pages 5-30, August.
    12. Fangfang Tan, 2008. "Punishment in a Linear Public Good Game with Productivity Heterogeneity," De Economist, Springer, pages 269-293.
    13. Offerman, Theo & Sonnemans, Joep & Schram, Arthur, 1996. "Value Orientations, Expectations and Voluntary Contributions in Public Goods," Economic Journal, Royal Economic Society, vol. 106(437), pages 817-845, July.
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    Cited by:

    1. Abhijit Ramalingam & Antonio J. Morales & James M. Walker, 2016. "Peer sanctioning in isomorphic provision and appropriation social dilemmas," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-09, School of Economics, University of East Anglia, Norwich, UK..

    More about this item

    Keywords

    common-pool resources; asymmetry; cooperation; laboratory experiments;

    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

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