The Instability of the Nash Equilibrium in Common-Pool Resources
Efficient allocations in common-pool resources cannot be accomplished when appropriators are selfish. In addition to this dilemma, using a linear approximation of best response functions at the Nash equilibrium in the common-pool resource environment, we find that the system of simultaneous difference equations is locally unstable if the number of appropriators is at least four. This result indicates that the equilibrium analysis might not capture the essence of the common-pool resource problem, but provides an answer to ``some unexplained pulsing behavior'' (Ostrom, Journal of Economic Behavior and Organization, vol. 61, no.2 , p. 150) of each appropriator's labor input in common-pool resource experiments.
|Date of creation:||Oct 2014|
|Date of revision:||Oct 2014|
|Publication status:||Published in SDE Series, October 2014, pages 1-12|
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