Cooperation in the Commons with Unobservable Actions

Nori Tarui, Charles Mason, Stephen Polasky and Greg Ellis (ellis@u.washington.edu)
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Greg Ellis: Department of Economics, University of Washington

No 200711, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: 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.

Keywords: Common property resource; cooperation; dynamic game; unobservable actions (search for similar items in EconPapers)
JEL-codes: D62 Q20 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2007-01
New Economics Papers: this item is included in nep-agr, nep-cbe, nep-env, nep-gth and nep-soc
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http://www.economics.hawaii.edu/research/workingpapers/WP_07-11.pdf First version, 2007 (application/pdf)

Related works:
Journal Article: Cooperation in the commons with unobservable actions (2008)
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