283 research outputs found
Instantaneous Gratification and Common Property Resource Games
Treballs Finals del MĂ ster d'Economia, Facultat d'Economia i Empresa, Universitat de Barcelona, Curs: 2016-2017, Tutors : JesĂşs MarĂn Solano ; Jorge Navas RĂłdenesWe compute the cooperative and noncooperative solutions for sophisticated agents with Instantaneous-Gratification discounting in infinite horizon, as an extension of the work of Harris & Laibson (2013) and Zou, Chen & Wedge (2014). This research contributes to the existing literature to the extent that we compute multi-agent sophisticated solutions with Instantaneous-Gratification discounting in infinite time, and we place the results of the Instantaneous-Gratification model in context of the management of renewable natural resources. The conclusions withdrawn are applicable for resources of any kind and are suitable for settings where the temporal horizon is unlimited, but the duration of the short-run is large enough to dodge the future. The discussion of this work is useful for policy implementation towards exploitation of renewable natural resources under different forms of ownership
Cooperation in the Commons with Unobservable Actions
We model a dynamic common property resource game with unobservable actions and non-linear stock dependent costs. We propose a strategy profile that generates a worst perfect equilibrium in the punishment phase, thereby supporting cooperation under the widest set of conditions. We show under what set of parameter values for the discount rate, resource growth rate, harvest price, and the number of resource users, this strategy supports cooperation in the commons as a subgame perfect equilibrium. The strategy profile that we propose, which involves harsh punishment after a defection followed by forgiveness, is consistent with human behavior observed in experiments and common property resource case studies.Common property resource, cooperation, dynamic game, unobservable actions
Inequality and a Repeated Joint Project
Agents voluntarily contribute to an infinitely repeated joint project. We investigate the conditions for cooperation to be a renegotiation-proof and coalition-proof equilibrium before examining the influence of output share inequality on the sustainability of cooperation. When shares are not equally distributed, cooperation requires agents to be more patient than under perfect equality. Beyond a certain degree of share inequality, full efficiency cannot be reached without redistribution. This model also explains the coexistence of one cooperating and one free-riding coalition. In this case, increasing inequality can have a positive or negative impact on the aggregate level of effort.
Commitment vs. noncommitment behaviors in natural resource conflicts: A case study of groundwater resources
We examine the problem of natural resource exploitation when an exceptional extraction of a resource (groundwater) is needed and devoted to a different use than its regular use. The study applies a two-stage Stackelberg game to examine the strategic behavior of players who compete for water. The leader, with varying weights assigned to the different uses and environmental concern, is the manager of the new (nonregular) resource use, who only intervenes in the second stage of the game. The follower is a regular (agricultural) resource user. We examine the crucial resource of groundwater, introducing two types of Stackelberg equilibria (open-loop and feedback) that can arise depending on agents' commitment behavior. We compare the extraction behaviors of the leader and the follower for the two equilibria and the effects on the final state of the resource and agents' profits. Unexpectedly, we demonstrate that situations can occur in which noncommitment strategies could be more favorable than commitment strategies in terms of the final aquifer stock and the regular user's profits. To avoid that noncommitment strategies are implemented in these circumstances, the weights assigned by the leader to the different uses will play an important rol
COMMON-PROPERTY RESOURCE USE AND OUTSIDE OPTIONS: COOPERATION ACROSS GENERATIONS IN A DYNAMIC GAME
This paper presents a noncooperative dynamic game with overlapping generations of players using a common-property natural resource, and identifies conditions under which cooperation is supported as an equilibrium of the game. It explores how heterogeneity among the resource users and access to outside markets or microcredit affect local resource use in developing countries.Resource /Energy Economics and Policy,
On competition for spatially distributed resources in networks: an extended version
We study the dynamics of the exploitation of a natural resource distributed among and flowing between several nodes connected via a weighted, directed network. The network represents both the locations and the interactions of the resource nodes. A regulator decides to designate some of the nodes as natural reserves where no exploitation is allowed. The remaining nodes are assigned (one-to-one) to players, who will exploit the resource at the node. We show how the equilibrium exploitation and the resource stocks depend on the productivity of the resource sites, on the structure of the connections between the sites, and on the number and the preferences of the agents. The best locations to host nature reserves are identified according to the modelâs parameters, and we find that they correspond to the most central (in the sense of eigenvector centrality) nodes of a suitably redefined network that considers the nodesâ productivity
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 playersâ 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.Fundação para a Ciência e a Tecnologia (FCT) - SFRH/BSAB/1226/2012, SFRH/BSAB/1159/2011Water Science and Policy Cente
Essays on endogenous time preference and strategic interaction
Ankara : The Department of Economics, Ä°hsan DoÄramacÄą Bilkent Univ., 2013.Thesis (Ph. D.) -- Bilkent University, 2013.Includes bibliographical refences.This thesis includes three self contained essays on the existence and qualitative
properties of equilibrium dynamics under endogenous time preference. In the Ărst
essay, we reconsider the optimal growth model proposed by Stern (2006). We prove
the almost everywhere di§erentiability of the value function and uniqueness of the
optimal path, which were left as open questions and show how a small perturbation
to the price of future oriented capital qualitatively changes the equilibrium dynamics.
Almost none of the studies on endogenous time preference consider the strategic interaction
among the agents. In the second essay, by considering a strategic growth model
with endogenous time preference, we provide the su¢ cient conditions of supermodularity
for dynamic games with open-loop strategies and show that the stationary state Nash equilibria tend to be symmetric. We numerically show that the initially rich can
pull the poor out of poverty trap even when sustaining a higher level of steady state
capital stock for itself. Lastly, in the third essay, we consider the socially determined
time preference which depends on the level of Ăsh stock and characterize the basic
Ăshery model under this setup. We provide existence of collusive and open-loop Nash
equilibria and compare the e¢ ciency and qualitative properties of them.Turan, Agah RehaPh.D
On the Problem of Vague Terms: A Glossary of Clearly Stated Assumptions & Careful, Patient, Descriptions
Coase 1930 endures through the decades as one of the most-cited papers in economics due to the fact that it highlights a fundamental and equally enduring problem: "Economic theory has suffered in the past from a failure to state clearly its assumptions. Economists in building up a theory have often omitted to examine the foundations on which it was erected. This examination is, however, essential not only to prevent the misunderstanding and needless controversy which arise from a lack of knowledge of the assumptions on which a theory is based, but also because of the extreme importance for economics of good judgement in choosing between rival sets of assumptions." In 1944 Von Neumann and Morgenstern offered the simply, yet invariably rejected solution: "In⌠economics the most fruitful work may be that of careful, patient description; indeed this may be by far the largest domain for the present and some time to comeâŚ.Economic problems [have been and are often] not formulated clearly and are often stated in such vague terms as to make mathematical treatment a priori appear hopeless because it is quite uncertain what the problems really are. There is no point in using exact methods where there is no clarity in the concepts and issues to which they are to be applied. Consequently the initial task is to clarify the knowledge of the matter by further careful descriptive work." This paper offers a stone along the path to the solution to this problem by offering a glossary in this spirit, a glossary germain to some of the most fundamental, open problems in economics. As the fate of the human race may lay in the balance to finding solutions to these problems, this glossary may be a steop in the right direction.economic terms; methodology; scientific method; coase 1930; Von Neumann & Morgenstern 1944; definitions; careful, patient descriptions
Environmental Agreements in a Two-Level Dynamic Framework
This paper addresses the issue of conflicts between countries who share a renewable natural resource using a two-level framework. Contrary to the usual modeling of countries as representative agents who sign an international treaty to protect the resource that they share, this research considers the existence of some interaction between different sort of consumers and firms within each country. It discusses the influence of both domestic characteristics (consumers´ preferences and firms´costs) and the presence of some national environmental policy on the resulting regional agreement. The international level is modeled as a dynamic game in which each government decides its domestic regulation. Agreements are viewed as the result of some sort of bargaining among countries. An important insight of this paper is the incorporation of a numerical simulation (for a linearquadratic example) to depict the dynamics of the model. In particular, its main result is an estimation of the path of emissions with the optimum treaty and without any agreement (the Markov Perfect equilibrium of the game).
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