Each participant in this experiment chooses an "effort" that represents
a resource extraction activity (e.g. fishing). The resource is taken from a
common pool in the sense that a person's share of the harvest equals their share
of the total effort. The value of the total harvest is a quadratic function of total effort made by all
people in a group (constrained to be non-negative), so that average harvest value is a decreasing, linear function of total group effort in
the relevant range.
There is an externality in the sense that individuals have no incentive to correct for the fact
that an increase in one's own effort reduces the average product for the
others. The results illustrate the effects of the social dilemma that arises
with shared resources.
 | | | | | | Observed harvest rates often track the Nash prediction, which results in
"over-fishing" of the common resource. For a discussion of related experiments
and social intitutions that may mitigate externalities, see
Ostrom, Gardner, and Walker (1994)
Rules, Games and Common Pool Resources,
University of Michigan Press. |
Vecon Lab - December 17, 2024 |