Economics at your fingertips  

An experimental study of a common property renewable resource game in continuous time

Dina Tasneem (), Engle-Warnick, Jim and Hassan Benchekroun ()

Journal of Economic Behavior & Organization, 2017, vol. 140, issue C, 91-119

Abstract: Infinite time horizon linear quadratic differential games typically admit a linear Markov-perfect equilibrium as well as a continuum of equilibria with strategies that are nonlinear functions of the state variable. Using an experimental approach, we examine the empirical relevance of the nonlinear equilibriain a two-player common property resource game. We found, extraction behavior in response to evolving stock deviates significantly from the equilibrium strategies. However, long-term outcomes, in terms of steady states, predicted by both linear and nonlinear Markovian strategies are attained in significant proportions by the actual play. While 19% of participants’ play resulted in a steady state that coincides with the stable steady state supported by the linear Markov-perfect equilibrium strategy, 41.5% of all games resulted in steady states within the range supported by nonlinear Markovian strategies. Our results indicate that nonlinear equilibria cannot be ruled out as irrelevant on behavioral grounds. We also found evidence for the use of simple rule-of-thumb strategies, which consist of refraining from extraction until a threshold stock is reached and extracting at a positive constant rate after the threshold is reached.

Keywords: Differential games; Experimental economics; Markovian strategies; Nonlinear strategies; Common property resources (search for similar items in EconPapers)
JEL-codes: C90 C73 Q20 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: An Experimental Study of a Common Property Renewable Resource Game in Continuous Time (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-09-30
Handle: RePEc:eee:jeborg:v:140:y:2017:i:c:p:91-119