Equity–Efficiency Optimizing Resource Allocation: The Role of Time Preferences in a Repeated Irrigation Game

Bjorn Van Campenhout, Ben D'Exelle and Els Lecoutere

Oxford Bulletin of Economics and Statistics, 2015, vol. 77, issue 2, 234-253

Abstract: type="main" xml:id="obes12058-abs-0001">

We study repeated water allocation decisions among small scale irrigation users in Tanzania. In a treatment replicating water scarcity conditions, convexities in production make that substantial efficiency gains can be obtained by deviating from equal sharing, leading to an equity–efficiency trade-off. In a repeated game setting, it becomes possible to reconcile efficiency with equity by rotating the person who receives the largest share, but such a strategy requires a longer run perspective. Correlating experimental data from an irrigation game with individual time preference data, we find that less patient irrigators are less likely to use a rotation strategy.

Date: 2015
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