Commons as a risk-management tool: theoretical predictions and an experimental test

Marielle Brunette (), Philippe Delacote, Serge Garcia and Jean-Marc Rousselle ()
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Jean-Marc Rousselle: LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier

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Abstract: The impact of the safety-net use of Common-pool resources (CPR) on the individual investment into and extraction from the commons is analyzed in this paper. Agents of the community first choose to invest in their private project and in the CPR; second, they choose how much to extract from their private project and the commons. The model compares two types of riskmanagement tool: CPR as risk-coping and risk-diversification mechanisms. It also compares two types of risk: risk on a private project and risk on CPR investment by other community members. The theoretical predictions are empirically tested with experimental economics. At this end, we propose an original CPR game composed of two periods, an investment one and an extraction one. Our result clearly shows that risk reduction in the private project unambiguously decreases investment in the CPR, while it does not impact CPR extraction. We also show that a risk-coping strategy is well understood as more flexible and influenced by the outcome in terms of private project yield.

Keywords: deforestation; experimental economics; common-pool resource; common-pool resource game (search for similar items in EconPapers)
Date: 2012-10-18
Note: View the original document on HAL open archive server: https://hal.science/hal-01072298v1
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Published in 2. International Conference: Environment and Natural Resources Management in Developing and Transition Economies, Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne (CERDI). FRA., Oct 2012, Clermont Ferrand, France

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Related works:
Journal Article: Commons as a Risk-Management Tool: Theoretical Predictions and an Experimental Test (2020)
Working Paper: Commons as a risk-management tool: theoretical predictions and an experimental test (2020)
Working Paper: Commons as a risk-management tool: theoretical predictions and an experimental test (2014)
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