Tipping and strong rarity value in a stochastic fishery game

Reinoud Joosten and Rogier Harmelink ()
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Reinoud Joosten: Financial Engineering (FE), Faculty of Behavioural, Management and Social Sciences (BMS), University of Twente, POB 217, 7500 AE Enschede, The Netherlands
Rogier Harmelink: Industrial Engineering & Business Information Systems (IEBIS), Faculty of Behavioural, Management and Social Sciences (BMS), University of Twente, POB 217, 7500 AE Enschede, The Netherlands

International Game Theory Review (IGTR), 2023, vol. 25, issue 03, 1-34

Abstract: Strong rarity value is the phenomenon that an increase in scarcity of a species (of plants or animals) leads to a price increase which more than compensates increased search costs and lower numbers found or caught. Tipping here is a regime shift moving the system into a low resource-level state from which it is impossible to escape unless measures to restore the resource are taken for a long period of time. We engineer a model in which agents wishing to maximize their limiting average rewards have two choices at every stage of the play, restraint or no-restraint (“overfish†). Overfishing damages the resource, causes tipping and induces scarcity which in turn creates rarity value. We find that Pareto-efficient equilibrium outcomes for very patient agents may require substantial overexploitation of the resource inducing serious threats to its sustainability. However, equilibrium behavior yields a sufficiently rich scheme of outcomes that leave room for viable compromises between ecologically and economically maximalistic policies.

Keywords: Stochastic games; endogenous stage payoffs; endogenous transition probabilities; rarity value; tipping; limiting average rewards; (non) homogeneous Markov chains (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S0219198923400017

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