Evolutionary Stability in Common Pool Resources.

The Tragedy of the Commons refers to the dissipation of a common- pool ressource when any appropriator has free access to it. Under the behavior of absolute payoff maximisation, the common-pool resource game leads to a Nash equilibrium in which the resource is overexploited. However, some empirical studies show that the overutilization is even larger than the Nash equilibrium predicts. We account for these results in an evolutionary framework. Under an imitation-experimentation dynamics, the long run stable behavior implies a larger exploitation of the resource than in the classical Nash equilibrium.common-pool resource, imitation behavior, evolutionary stable strategy, evolutionary games.

Prices versus Quantities for Common Pool Resources

In Weitzman (1974) the choice between price and quantity regulation under imperfect information is analysed. It is shown that the choice between the two regulatory instruments depends on the sign of the sum of the curvatures of the cost and benefit functions. If the marginal benefit function is steep and the marginal cost function is flat quantity regulation is preferred over price regulation, while price regulation is preferred over quantity regulation if the marginal benefit function is flat and the marginal cost function is steep. The results in Weitzman (1974) are sometimes quoted in studies of fisheries management. In this paper an analysis of conditions for generalising the Weitzman result to fisheries economics is presented. It is shown that the result can be generalised if the cost function is additively separable in stock size and catches. This leads to the conclusion that the results hold for a schooling fishery. However, for a search fishery the condition that the cost function must be additively separable is seldom fulfilled and quotation of the classical article is therefore not reasonable. A further result is that for a schooling fishery, taxes are likely to be preferred over individual transferable quotas in the case where there is imperfect information about costs. The reason is that the marginal cost function is likely to be steeper than the demand function. In the light of this result, the fact that individual quotas regulate over 55 fisheries while taxes regulate none is surprising.Fisheries Management, Imperfect Information, Taxes, Individual Transferable Quotas

Output Sharing Among Groups Exploiting Common Pool Resources

This paper provides an experimental testing ground for an equal output-sharing partnership approach as a common pool resource (CPR) management instrument. It examines the behaviour of resource users in output-sharing partnerships of different sizes, and evaluates the impact of partnership size and the way partners are assigned on effort (extraction) levels. Experimental results are very close to Nash predictions, and confirm that group size significantly affects resource user’s effort supply. The first best solution is achieved, when resource users are privately extracting from the CPR and equally sharing their output with the socially optimal number of partners. The way partners are allocated (randomly or with the same partners over 15 periods) does not significantly affect aggregate effort contributions. Income distribution, however, is more equitable with random allocation of partners than with fixed partners.

On the Optimal Taxation of Common-Pool Resources

Recent research developments in common-pool resource models emphasize the importance of links with ecological systems and the presence of non-linearities, thresholds and multiple steady states. In a recent paper Kossioris et al. (2008) develop a methodology for deriving feedback Nash equilibria for non-linear differential games and apply this methodology to a common-pool resource model of a lake where pollution corresponds to benefits and at the same time affects the ecosystem services. This paper studies the structure of optimal state- dependent taxes that steer the combined economic-ecological system towards the trajectory of optimal management, and provides an algorithm for calculating such taxes.Differential Games, non-linear Feedback Nash Equilibria, Ecosystems, Optimal State-dependent Tax

State Regulation of Open-Access, Common-Pool Resources.

Open-access, common-pool resources, such as many fisheries, aquifers, oil pools, and the atmosphere, often require some type of regulation of private access and use to avoid wasteful exploitation. This paper summarizes the arguments and literature associated with this problem. The historical and contemporary record of open-access resources is not a happy one, and many of the problems persist, despite large aggregate gains from resolving them. The discussion here suggests why that is the case. The paper focuses on government responses to the common pool, the private and political negotiations underlying them, and the information and transaction costs that influence the design of property rights and regulatory policies. Understanding the type of institution that emerges and its effects on the commons depends upon identifying the key parties involved, their objectives, and their political influence. Further, it requires detailed analysis of the bargaining that occurs within and across groups. The paper summarizes the open-access problem and provides case analyses of regulation of common-pool fisheries, oil reservoirs, and the atmosphere. The final section summarizes the general themes and the advantages of the New Institutional Economics (NIE) approach to analyzing the common pool.

Common pool resources: management for equitable and sustainable use

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Regulation and Evolution of Compliance in Common Pool Resources

The paper jointly models the evolution of compliance with regulation and the evolution of a CPR stock, by combining replicator dynamics describing compliance with harvesting rules, with resource stock dynamics. This evolutionary approach suggests that coexistence, in long run equilibrium, of both cooperative and non-cooperative rules under regulation is possible. Stock effects on profits and a certain structure of auditing probabilities could imply the emergence of a limit cycle in areas of low stock levels, as an equilibrium outcome for compliance and the biomass stock. It might be easier for the regulator to obtain full compliance under precommitment to fixed auditing probabilities.Common pool resources (CPR), harvesting, regulation, replicator dynamics, compliance

The Role of Rivalry. Public Goods versus Common-Pool Resources

Despite a large theoretical and empirical literature on public goods and common-pool resources, a systematic comparison of these two types of social dilemmas is lacking. In fact, there is considerable confusion about these two types of dilemma situations. As a result, they are often treated alike. In this paper we argue that the degree of rivalry is the fundamental difference between the two games. We show that rivalry implies that both games cannot be represented by the same game theoretic structure. Fur-thermore, we experimentally study behavior in a quadratic public good and a quadratic common-pool resource game with identical Pareto opti-mum but divergent interior Nash equilibria. The results show that partici-pants clearly perceive the differences in rivalry. Aggregate behavior in both games starts relatively close to Pareto efficiency and converges to the respective Nash equilibrium.

Three Essays on Defending Common-Pool Resources

% !TEX root = ../degeest2017dissertation.tex Environmental protection often relies on cooperation between individuals in uncoordinated groups. In cases such as the management of common-pool resources, individuals must not only monitor and enforce behavior within their group to prevent over-exploitation. They must also contend with external threats on the resource like poaching. This dissertation studies how individuals cooperate to manage shared resources and deter shared threats. The first chapter, Deterring poaching of a common-pool resource , considers the problem of deterring a threat that cannot be perfectly observed. I present results from common pool resource experiments designed to examine the ability of a group of resource users, called insiders, to simultaneously manage their own exploitation and defend their resource from encroachment by outsiders. The insiders can use communication, peer monitoring and sanctions to coordinate their decisions. In addition, they can sanction any outsiders they observe. I vary the insiders\u27 ability to observe and sanction the outsiders from no observability to partial and full observability. I find a striking non-monotonicity between observability of the outsiders and levels of poaching. Poaching was higher under partial monitoring than zero monitoring, and was lower and more stable under full monitoring. Although full observability allowed the insiders to better coordinate their own harvests, they were unable to fully deter poaching because their sanctions were far too low and they were unwilling to punish low levels of poaching. The second chapter, Defending public goods and common-pool resources , studies cooperation and deterrence of a shared threat in different strategic environments. In many real-world social dilemmas, groups of individuals must cooperate to create surplus and defend it from theft. Theft can either foster or discourage collective action. On the one hand, a shared threat can align individual incentives. On the other hand, surplus creation may decrease if individuals are unsure how group members will contribute towards defense. Moreover, there is literature that suggests cooperation is sensitive to whether individual actions confer positive externalities (public goods, PG) or negative externalities (common-pool resources, CPR) on group members -- the cooperation divergence . To examine the relationship between cooperation and defense in different externality settings, I conduct an experiment in which a group of insiders providing a public good or conserving a common-pool resource must coordinate to deter outsiders from stealing the value of their surplus. Our theory predicts that theft will have no different effect on behavior across externality settings. However, I find that it does. Surplus creation is significantly higher in the CPR treatment, while surplus defense is significantly higher in the PG treatment. Across both treatments, I find that the shared threat increases variation within groups, but the effect is more dramatic in the PG treatment. Finally, the third chaper, Enforcement networks in social dilemmas , studies how enforcement emerges and evolves in the first chapter. Sanctions can increase cooperation in social dilemmas, but they impose a high social cost until a credible threat to non-cooperative behavior is established. Moreover, credible threats depend on enforcement structure. For example, small sanctions implemented by many subjects may have a different impact on behavior than the same volume of sanctions meted out by a single subject. In order to understand how credible threats to deviant behavior emerge, it is therefore necessary to study how enforcement structure emerges and evolves in groups. I study enforcement structure by taking a network approach to data from a social dilemma experiment with peer punishment. The exchange of sanctions between subjects can be framed as a directed, weighted network that evolves, enabling us to use tools from network structure to summarize, predict and simulate behavior. I first visualize and summarize the structure of these networks and show that enforcement structure is non-random and tends to cluster around a few individuals. I then model network formation and network efficiency using an empirical framework that separately considers edge formation (a binary sanctioning event) from edge weight (sanction size) and find that subjects respond more to the act of being sanctioned rather than the volume of sanctions. Finally, I recover the underlying Markov process governing enforcement structure and simulate expected long-run behavior. I conclude with a discussion of how my approach can be used to study generalized exchange networks