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Time and uncertainty in resource dilemmas: equilibrium solutions and experimental results

Anabela Botelho, Ariel Dinar (), Ligia Pinto and Amnon Rapoport

Experimental Economics, 2014, vol. 17, issue 4, 649-672

Abstract: Most common pool resource (CPR) dilemmas share two features: they evolve over time and they are managed under environmental uncertainties. We propose a stylized dynamic model that integrates these two dimensions. A distinguishing feature of our model is that the duration of the game is determined endogenously by the users’ collective decisions. In the proposed model, if the resource stock level below which the irreversible event occurs is known in advance, then the optimal resource use coincides with a unique symmetric equilibrium that guarantees survival of the resource. As the uncertainty about the threshold level increases, resource use increases if users adopt decision strategies that quickly deplete the resource stock, but decreases if they adopt path strategies guaranteeing that the unknown threshold level is never exceeded. We show that under relatively high uncertainty about resource size, CPR users frequently implement decision strategies that terminate the game immediately. When this uncertainty is reduced, they maintain a positive resource level for longer durations. Copyright Economic Science Association 2014

Keywords: Common pool resources; Social dilemmas; Uncertainty; Sustainability (search for similar items in EconPapers)
Date: 2014
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Working Paper: Time and Uncertainty in Resource Dilemmas: Equilibrium Solutions and Experimental Results (2012) Downloads
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DOI: 10.1007/s10683-013-9388-2

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