Time and Uncertainty in Resource Dilemmas: Equilibrium Solutions and Experimental Results
Most common pool resource (CPR) dilemmas share two features: they evolve over time and they are managed under environmental uncertainties. We propose a finite-horizon, stochastic, dynamic model that integrates these two dimensions. A distinguishing feature of our model is that the duration of the game is determined endogenously by the players’ collective decisions. In the proposed model, if the resource stock level below which the irreversible event occurs is known in advance, then the optimal resource use coincides with a unique symmetric equilibrium that guarantees survival of the resource. As the uncertainty about the threshold level increases, resource use increases if users adopt decision strategies that quickly deplete the resource stock; however, resource use decreases if they adopt path strategies guaranteeing that the unknown threshold level is never exceeded. Our experimental results show that CPR users frequently implement decision strategies that terminate the game immediately. When the uncertainty about the resource level is reduced, users maintain a positive resource level for a longer duration.
|Date of creation:||Sep 2012|
|Date of revision:|
|Contact details of provider:|| Postal: NIMA, EEG - Universidade do Minho, 4710-057 Braga, Portugal|
Phone: +351 253601930
Fax: +351 253601380
Web page: http://nima.eeg.uminho.pt/
|Order Information:|| Postal: NIMA, EEG - Universidade do Minho, 4710-057 Braga, Portugal|
Web: http://nima.eeg.uminho.pt/ Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Papke, Leslie E & Wooldridge, Jeffrey M, 1996.
"Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 11(6), pages 619-32, Nov.-Dec..
- Leslie E. Papke & Jeffrey M. Wooldridge, 1993. "Econometric Methods for Fractional Response Variables with an Application to 401(k) Plan Participation Rates," NBER Technical Working Papers 0147, National Bureau of Economic Research, Inc.
- John Hey & Tibor Neugebauer & Abdolkarim Sadrieh, 2009.
"An Experimental Analysis of Optimal Renewable Resource Management: The Fishery,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 44(2), pages 263-285, October.
- Hey, J.D. & Neugebauer, T. & Sadrieh, A., 2002. "An Experimental Analysis of Optimal Renewable Resource Management : The Fishery," Discussion Paper 2002-37, Tilburg University, Center for Economic Research.
- Tibor Neugebauer & John D. Hey & K Sadrieh, 2008. "An Experimental Analysis of Optimal Renewable Resource Management: The Fishery," LSF Research Working Paper Series 08-10, Luxembourg School of Finance, University of Luxembourg.
- Mason, Charles F. & Phillips, Owen R., 1997. "Mitigating the Tragedy of the Commons through Cooperation: An Experimental Evaluation," Journal of Environmental Economics and Management, Elsevier, vol. 34(2), pages 148-172, October.
- Walker, James M & Gardner, Roy, 1992. "Probabilistic Destruction of Common-Pool Resources: Experimental Evidence," Economic Journal, Royal Economic Society, vol. 102(414), pages 1149-61, September.
- 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.
- Koundouri, Phoebe, 2004. "Current issues in the economics of groundwater resource management," MPRA Paper 38425, University Library of Munich, Germany.
- Phoebe Koundouri, . "Current issues in the economics of groundwater resource management," DEOS Working Papers 0402, Athens University of Economics and Business.
- Tsur Yacov & Zemel Amos, 1995. "Uncertainty and Irreversibility in Groundwater Resource Management," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 149-161, September.
- Nuria Osés-Eraso & Frederic Udina & Montserrat Viladrich-Grau, 2008. "Environmental versus Human-Induced Scarcity in the Commons: Do They Trigger the Same Response?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(4), pages 529-550, August.
- 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.
- Budescu David V. & Rapoport Amnon & Suleiman Ramzi, 1995. "Common Pool Resource Dilemmas under Uncertainty: Qualitative Tests of Equilibrium Solutions," Games and Economic Behavior, Elsevier, vol. 10(1), pages 171-201, July.
- Clarke, Harry R. & Reed, William J., 1994. "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 991-1010, September.
- H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124.
- Yin, Runsheng & Newman, David H., 1996. "The Effect of Catastrophic Risk on Forest Investment Decisions," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 186-197, September.
- Dutta Prajit K., 1995. "Collusion, Discounting and Dynamic Games," Journal of Economic Theory, Elsevier, vol. 66(1), pages 289-306, June.
- Reinganum, Jennifer F & Stokey, Nancy L, 1985. "Oligopoly Extraction of a Common Property Natural Resource: The Importance of the Period of Commitment in Dynamic Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 161-73, February.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Muradian, Roldan, 2001. "Ecological thresholds: a survey," Ecological Economics, Elsevier, vol. 38(1), pages 7-24, July.
When requesting a correction, please mention this item's handle: RePEc:nim:nimawp:47/2012. 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: (NIMA)
If references are entirely missing, you can add them using this form.