Cooperative and Noncooperative Extraction in a Common Pool with Habit Formation
Dynamic Games and Applications, 2017, vol. 7, issue 3, 468-491
Abstract The present paper considers the exploitation of a common-property, nonrenewable resource, by individuals subject to habit formation. We formalize their behavior by means of a utility function, depending on the difference between the individuals’ current consumption and the consumption level which they aspire, the latter being a weighted average of past consumptions in the population. We derive and compare the benchmark cooperative solution and a noncooperative Markov-perfect Nash equilibrium of the differential game. We investigate how the intensity, persistence and initial level of habits shape the cooperative and noncooperative solutions. We prove that habit formation may either mitigate or worsen the tragedy of the commons.
Keywords: Differential games; Nonrenewable resource; Common-property; Habits; Social status (search for similar items in EconPapers)
JEL-codes: C7 D7 D8 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s13235-016-0192-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:dyngam:v:7:y:2017:i:3:d:10.1007_s13235-016-0192-4
Ordering information: This journal article can be ordered from
Access Statistics for this article
Dynamic Games and Applications is currently edited by Georges Zaccour
More articles in Dynamic Games and Applications from Springer
Bibliographic data for series maintained by Sonal Shukla ().