Sharing Rules for Common-Pool Resources when Self-insurance is Available: an Experiment

Marianne Lefebvre (marianne.lefebvre@univ-angers.fr)

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: A laboratory experiment is used to analyze how the rule used to allocate a CPR in case of shortage impacts the individual trade-o between relying on a free but uncertain CPR and investing in a secure alternative resource, which constitutes a self-insurance. I compare three rules from the bankruptcy literature (contrained-equal awards, constrained- equal losses, proportional) and a rule that allocates no resource in case of shortage. I find that the best coordination institution towards the optimal level of self-insurance is the no allocation rule. However, eciency and reliability are higher with the constrained-equal awards rule. Rules which are dened as a proportion of claims, such as the proportional and constrained-equal losses rule induce sub-optimal levels of self-insurance. Results are interpreted in the context of water management in France.

Pages: 47 pages
Date: 2011-11, Revised 2012-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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