Common-pool Resource Management and Risk Misperceptions

Can Askan Mavi and Nicolas Querou

Annals of Economics and Statistics, 2024, issue 156, 115-140

Abstract: We study a dynamic model of common-pool resource management in which agents have different (mis)perceptions about the probability of a regime shift. We show that differences in risk misperceptions and the pre- and post-shift resource quality levels have a first-order effect on the noncooperative policy. Regarding the efficiency benchmarks, these differences have no effect on the cooperative solution under a paternalistic social planner. However, they do have a first-order effect on the populist cooperative solution, even when agents are on average unbiased. A tragedy of the commons problem arises at the aggregate population level, but not at all sub-population levels. From the point of view of policy instruments, a uniform quota policy would be optimal, while either a uniform or a differentiated tax policy would not be. Finally, policies aimed at correcting misperceptions have an ambiguous effect on welfare as it depends on certain characteristics (resource quality levels, population structure).

Keywords: Conservation; Risk Misperceptions; Environmental Risk; Renewable Resources; Dynamic Games. (search for similar items in EconPapers)
JEL-codes: C72 D91 Q20 Q54 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Common-pool resource management and risk misperceptions (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2024:i:156:p:115-140

DOI: 10.2307/48804183

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