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Common pool resource management and risk perceptions

Can Askan Mavi () and Nicolas Querou
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Can Askan Mavi: University of Luxembourg [Luxembourg]

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Abstract: Motivated by recent discussions about the issue of risk perceptions for climate change related events, we introduce a non-cooperative game setting where agents manage a common pool resource under a potential risk, and agents exhibit different risk perceptions. We first highlight that risk and risk perceptions have qualitatively differing impacts on optimal decisions. Then, focusing on the effect of the polarization level and other population features, we show that the type of perception (overestimation, underestimation) and the pre- and post-shift resource quality levels have first-order importance on the qualitative nature of behavioral adjustments and on resource conservation. When there are non-uniform perceptions within the population, the intra-group structure qualitatively affects the degree of resource conservation. Moreover, science-based agents (using the probability estimate making consensus within the scientific community) may react in non-monotone ways to changes in the polarization level. The size of the science-based agents' sub-population does not qualitatively affect how an increase in the polarization level impacts behavioral adjustments, even though it affects the magnitude of this change. Finally, it is shown how risk perceptions affect the comparison between centralized and decentralized management, and several policies are discussed based on their likely effects on welfare.

Keywords: C72; Conservation; Perception bias; Environmental risk; Renewable resources; Dynamic games; Dynamic games JEL Classification: Q20; Q54; D91 (search for similar items in EconPapers)
Date: 2022-10-19
New Economics Papers: this item is included in nep-env, nep-gth and nep-res
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Working Paper: Common pool resource management and risk perceptions (2023)
Working Paper: Common pool resource management and risk perceptions (2021) Downloads
Working Paper: Common pool resource management and risk perceptions (2020) Downloads
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