Strong and Weak Rarity Value: Resource Games with Complex Price–Scarcity Relationships

Reinoud Joosten ()
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Reinoud Joosten: University of Twente

Dynamic Games and Applications, 2016, vol. 6, issue 1, No 5, 97-111

Abstract: Abstract We analyze effects of rarity value on the sustainability of a natural resource. Rarity value means that under extreme scarcity of the resource unit profits increase ‘explosively.’ We focus on equilibrium behavior of very patient agents in a Small Fish War. Agents interacting on a body of water have two options: they can fish with restraint or without. Fishing with restraint allows the fish stock to recover; fishing without yields higher immediate but lower future catches. We distinguish weak and strong rarity value; for the strong (weak) variant, total symmetric Pareto-efficient rewards are higher (lower) than those obtained by keeping the price fixed at highest-resource-stock level. Only for strong rarity value, the price effect more than compensates for smaller sustainable catches. Pareto-efficient equilibrium behavior dictates that lowest sustainable stocks are targeted.

Keywords: Stochastic games; Limiting average rewards; Common pool resource games; Jointly-convergent strategies; Rarity value (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s13235-015-0136-4

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