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An Experimental Study of a Common Property Renewable Resource Game in Continuous Time

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

CIRANO Working Papers from CIRANO

Abstract: We experimentally study behavior in a common property renewable resource extraction game with multiple equilibria. In the experiment, pairs of subjects competitively extract and consume a renewable resource in continuous time. We find that play evolves over time into multiple steady states, with heterogeneous extraction strategies that contain components predicted by equilibrium strategies. We find that simple rule-of-thumb strategies result in steady-state resource levels that are similar to the best equilibrium outcome. Sensitivity of aggressive strategies to the starting resource level suggests that improvement in renewable resource extraction can be attained by ensuring a healthy initial resource level. Our experiment thus provides empirical evidence for equilibrium selection in this widely used differential game, as well as evidence for the effectiveness of a resource management strategy.

Keywords: Renewable resources; dynamic games; differential games; experimental Economics; Markovian Strategies; Common Property Resource (search for similar items in EconPapers)
JEL-codes: C90 C73 Q2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-exp
Date: 2014-01-01
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Journal Article: An experimental study of a common property renewable resource game in continuous time (2017) Downloads
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Handle: RePEc:cir:cirwor:2014s-09