Browsing by Author "Walker, James M."

Now showing 1 - 29 of 29

Appropriation Externalities in the Commons: Repetition, Time Dependence, and Group Size
(1995) Herr, Andrew; Gardner, Roy; Walker, James M.
"The use of Common Pool Resources (CPR) generally implies the existence of appropriation externalities. The externality studied in this paper arises because the cost of appropriation is a function of all players' appropriation. We derive the equilibrium predictions and conduct experiments for games in which the appropriation externality is either time independent or time dependent. In the repeated time independent CPR game, the appropriation externality is occurs as the cost of appropriation for each individual in a given decision round is a function of other individuals appropriation round. In the time dependent game, individual appropriation costs are a function of appropriation of all individuals across all rounds, with the cost of appropriation increasing with the life of the CPR. This time dependency exacerbates the appropriation externality at the subgame perfect equilibrium, as appropriators race to utilize the resource. Finally in a result reminiscent of the tragedy of the commons, the appropriation externality is exacerbated as the number of players rises. Preliminary results from experiments with two and five players are presented."
Asymmetric Payoffs in Simultaneous and Sequential Prisoner's Dilemma Games
(2006) Ahn, Toh-Kyeong; Lee, Myungsuk; Ruttan, Lore M.; Walker, James M.
"We investigate the role of payoff asymmetry in laboratory prisoner's dilemma games. Symmetric and Asymmetric games are examined in simultaneous and sequential settings. In the asymmetric/sequential games, we study the impact of having payoff advantaged players moving either first or second. Asymmetry reduces the rates of cooperation in simultaneous games. In sequential games, asymmetry interacts with order of play such that the rate of cooperation is highest when payoff disadvantaged players move first. The presence of an exit option increases cooperation by the players who choose to play the game when payoffs are symmetric, or when payoffs are asymmetric and the payoff disadvantaged player moves first."
Communication and Free Riding Behavior: The Voluntary Contribution Mechanism
(1986) Isaac, R. Mark; Walker, James M.
Subsequently published as: "Group Size Hypotheses of Public Goods Provision: The Voluntary Contribution Mechanism," Quarterly Journal of Economics, Vol. CIII, February 1988, 179-200 "One of the most commonly discussed problems in resource allocation literature is the so called 'free rider' hypothesis for the production of public goods. Briefly, the economic premise is that agents, acting in their own self interest, will under-reveal demand, thus leading to an under allocation of resources to the public good, As reported in Isaac, Walker and Thomas (1984), hereafter IWT, there is a growing body of experimental literature aimed at examining the degree to which 'free-riding' behavior can be observed in true public good environments. More specific to the problem investigated here is that segment of this work which focuses on identifying those environmental characteristics which influence the level of free riding behavior in the particular context of the voluntary contribution mechanism. From this previous work and after further experimental investigation."
Communication in a Commons: Cooperation Without External Enforcement
(1989) Ostrom, Elinor; Walker, James M.
"The experiments reported in this paper provide strong evidence for the power of face-to-face communication in a repeated common-pool resource environment where decisions are made privately. When communication was provided as a 'costless' institution, players successfully used the opportunity to: (a) calculate coordinated rent improving strategies, (b) devise verbal agreements to implement these strategies, and (c) deal with non-conforming players. "In field settings, it is rare that the opportunity to communicate is costless. Someone has to invest time and effort to create and maintain arenas for face-to-face communication. The cost of providing an arena for communicating has not been overtly considered in previous experimental work. We report the results from a series of experiments designed to investigate the affect of costly provision of the communication mechanism on: a) the ability of players to provide the mechanism; and b) the impact of the second order dilemma in solving the first order dilemma posed by the common pool environment itself. In summary, the provision problem players faced in the costly communication experiments was not trivial and did in fact create a barrier. In all three experiments, the problem of providing the institution for communication diminished the success of either: (a) having the ability to develop a coordinated strategy and/or (b) dealing with players who cheated on a previous agreement. On the other hand, all groups succeeded to some degree in providing the communication mechanism and in significantly improving the efficiency of resource allocation decisions."
Covenants With and Without a Sword: Self-Enforcement is Possible
(1991) Ostrom, Elinor; Walker, James M.; Gardner, Roy
"Contemporary political theory often assumes that individuals cannot make credible commitments where substantial temptations exist to break them, unless such commitments are enforced by an external agent. Empirical evidence suggests, however, that individuals facing social dilemmas in many cases develop credible commitments without relying on external authorities. Fishers, irrigators, or herders appropriating from a CPR have repeatedly shown their capacity to organize themselves, to establish credible commitments, to monitor each others' behavior, and to impose sanctions on those who break their commitments. In this paper, we present findings from a series of experiments designed to explore the issue of endogenous formation of commitments and enforcement of such commitments. In a laboratory environment designed to parallel the decision environment of many CPRs, we manipulate treatments to examine: (1) communication alone (one-shot and repeated), (2) sanctioning alone, and (3) communication combined with the possibility of sanctioning."
Generating Distrust in PD Games: Fear, Greed, and History of Play
(1999) Ahn, Toh-Kyeong; Ostrom, Elinor; Schmidt, David; Shupp, Robert; Walker, James M.
"The impact of game parameters, social history, and endogenous group formation on the choice of strategies in repeated PD games is experimentally examined. Overall, rates of cooperation are quite low and decline with repetition of the game. On the other hand, rates of cooperation are increased by increases in the level of cooperators gain, as well as in groups that endogenously, via strategy selection, 'self-select' into subgroups of relatively high cooperators. Rates of cooperation are also increased in situations where subjects are repeatedly matched with the same person, relative to situations with random matching between decision rounds."
Group Size and the Voluntary Provision of Public Goods: Experimental Evidence Utilizing Large Groups
(1991) Isaac, R. Mark; Walker, James M.; Williams, Arlington W.
Subsequently published as: "Group Size and the Voluntary Provision of Public Goods: Experimental Evidence Utilizing Large Groups," Journal of Public Economics 54(1), 1994, 1-36. "This paper presents new experimental evidence extending the investigation of free riding behavior in public goods provision. Experimental procedures are developed to deal with the logistical problems inherent in experiments involving many subjects. Data from Voluntary Contribution Mechanism experiments are reported utilizing group sizes of 4, 10, 40, and 100. These experiments provide replicable results which contradict the widely held view that a group's ability to provide the optimal level of a pure public good is inversely related to group size. On the contrary,groups of size 40 an d100 provided the public good more efficiently than groups of size 4 and 10. Several possible alternative explanations are provided for the inconsistency between these results and the predictions of the standard complete information Nash equilibrium model."
Heterogeneities, Information, and Conflict Resolution: Experimental Evidence on Sharing Contracts
(1993) Hackett, Steven C.; Dudley, Dean; Walker, James M.
Subsequently published as: "Heterogeneities, Information, and Conflict Resolution: Experimental Evidence on Sharing Contracts," Journal of Theoretical Politics 6(4), 1994, 495-525. "A growing body of field and experimental literature provides considerable evidence that individuals may evolve and adopt self-governing institutions that enable conflict resolution. A principle focus of this paper is the role of heterogeneity in individual attributes as an obstacle to conflict resolution. Results are presented from two ongoing research programs: (1) individual and group decision making in the context of a commonly held resource that is subtractable in units of appropriation, and (2) ex post negotiation of surplus shares in incomplete contracts. Both programs have been designed to investigate conflict resolution when subjects are heterogenous in costly investments they have incurred."
Heterogeneous Preferences and Collective Action
(2003) Ahn, Toh-Kyeong; Ostrom, Elinor; Walker, James M.
"In recent years, scholars have turned to alternative representations of utility to capture motivational heterogeneity across individuals. In the research reported here, we examine two models of heterogeneous utility—linear-altruism and inequity-aversion—in the context of two-person, social dilemma games. Empirical tests are conducted drawing on data from experiments and surveys. We find that the model of inequity-aversion accounts for a substantial proportion of the preference types and behavior that are not explained by the standard model of self-interested preferences. In contrast, the altruism model does not provide a significant increase in explanatory power over the inequity aversion model."
Incorporating Motivational Heterogeneity into Game Theoretic Models of Collective Action
(2002) Ahn, Toh-Kyeong; Ostrom, Elinor; Walker, James M.
Subsequently published as: "Incorporating Motivational Heterogeneity into Game Theoretic Models of Collective Action." Public Choice, 117, 2003, 295-315. "Understanding cooperation in the context of social dilemma games is fundamental to understanding how alternative institutional arrangements may foster collective action in such settings. An abundance of experimental evidence is inconsistent with predictions from game theoretic models based strictly on self-regarding utilities. In recent years, scholars have turned to alternative representations of utility in an attempt to capture motivational heterogeneity across individuals. In the research reported here, we examine two models of heterogeneous utility, linear-altruism and inequity-aversion, as complements to the standard model based on purely self-interested motivations. We examine these models in the contest of two-person social dilemma games. In addition, we examine data from experiments and survey instruments that provide evidence related to the empirical robustness of models based on different types of players characterized by heterogeneous utility functions."
Institutions for Facilitating Cooperation: Evidence from Economics Experiments on Public Goods, Common-Pool Resources and Team Production Environments
(2003) Walker, James M.
"Over the past 30 years, applied microeconomics has seen an explosion in the use of experimental methods as a tool for observing economic behavior. Economic experiments serve as a complement to field research using, allowing the researcher to create and control key theoretically based rules of decision making and incentives. Experimental economic environments are designed to create the incentive systems of alternative market and nonmarket economic institutions, allowing the researcher to examine propositions related to static equilibrium theory, dynamic learning models, and individual choice theory. Economic incentives are most often created via salient cash rewards designed to induce the incentive properties of the economic problem under investigation. "This paper deals with behavior in an institutional setting referred to as a social dilemma. We begin by considering the following resource allocation problem that might be implemented in an experimental laboratory decision-making experiment."
Instructions for Common Pool Resource Game Used by the World Bank
(1997) Walker, James M.; Gardner, Roy; Ostrom, Elinor
"This game has the same structure as a renewable common pool resource such as a forest, an offshore fishery, or an irrigation system. As participants in this game, you may imagine that you are fishermen, fishing for fish or local villagers needing to find firewood."
The Nature of Common-Pool Resource Problems
(1987) Gardner, Roy; Ostrom, Elinor; Walker, James M.
Published as: "The Nature of Common-Pool Resource Problems," Rationality and Society 2(3), July 1990, 335-358. "A large, multidisciplinary literature focuses on the problems occurring when multiple individuals concurrently use common-pool resources such as fisheries, grazing areas, airsheds, oil pools, and irrigation systems. Some scholars presume that all such problems share a single underlying theoretical structure -- that of an iterated, Prisoner's Dilemma game or of a collective action problem. Others have used more specific models, such as those of rent dissipation and technical externalities, to analyze these problems. On the other hand, many descriptions of the problems faced by individuals using common-pool resources do not rely on any theoretical structure to organize empirical research or test hypotheses. It is possible to learn from these descriptions about a wide variety of institutional arrangements that the users of common-pool resources have devised to change incentives and avoid the predicted theoretical outcomes. The institutional arrangements used to enable multiple users to manage common-pool resources are so diverse, however, that it is hard to imagine that they are all directed at helping individuals solve exactly the same set of problems."
The Power and Limitations of Proportional Cutbacks in Common-Pool Resources
(1998) Gardner, Roy; Herr, Andrew; Ostrom, Elinor; Walker, James M.
"This paper examines the success and limitations of proportional cutbacks as an allocation rule for improving the performance of common pool resources (CPRs). Two field cases, one success and one failure, motivate the analysis. For symmetric CPRs, we establish the existence of efficiency-enhancing proportional cutbacks. We then introduce complications that arise in the presence of asymmetries, where there are high value types and low value types. This asymmetry induces a continuum of proportional cutbacks that raise efficiency above Nash equilibrium. Calibrating a linear-quadratic CPR model to global carbon dioxide emissions, the efficiency and distributional consequences of proportional cutbacks like those embodied in the Kyoto Protocol are derived."
Probabilistic Destruction of Common Pool Resources: Experimental Evidence
(1991) Walker, James M.; Gardner, Roy
Subsequently Published as: Walker, James, and Roy Gardner 1992. "Probabilistic Destruction of Common-Pool Resources: Experimental Evidence." Economic Journal 102(414):1149-1161. "This paper uses a game theoretic model of a common pool resources to investigate whether the possibility of destroying the resource significantly affects choice behavior in the laboratory. "When subgame perfection involves a significant probability of destruction, the common pool resource is in every case destroyed and in most cases, rather quickly. Even when there is a subgame perfect equilibrium which is completely safe and yields near optimal rents, subjects do not stabilize at this equilibrium. The consequence of this destruction is in every case a significant loss in efficiency."
Proportional Cutbacks as an Institution for Promoting International Cooperation: Success and Limitations
(1998) Gardner, Roy; Ostrom, Elinor; Walker, James M.
Published as: "The Power and Limitations of Proportional Cutbacks in a Common-Pool Resource," (with R. Gardner, A. Herr, and E. Ostrom), Journal of Development Economics, Vol. 62, 2000, 515-533. "This paper studies the success and limitations of proportional cutbacks for improving the performance of common pool resources (CPRs) which cross national boundaries. Two field cases, one success and one failure, motivate the analysis. For symmetric CPRs, we establish the existence of efficiency enhancing proportional cutbacks. We then introduce complications that arise in the presence of asymmetries, where there are high value types and low value types. This asymmetry again induces a continuum of proportional cutbacks that raise efficiency above Nash equilibrium. Calibrating a linearquadratic CPR model to global carbon dioxide emissions, the efficiency and distributional consequences of proportional cutbacks like those embodied in the Kyoto Protocol are derived."
Racing for the Water: Laboratory Evidence on Managing a Groundwater Commons
(1994) Gardner, Roy; Moore, Michael R.; Walker, James M.
"This paper examines strategic behavior in the context of a dynamic common-pool resource game with a unique symmetric subgame equilibrium. Solving the model for its optimal solution and its subgame perfect equilibrium provides benchmarks for behavior observed in laboratory experiments. Baseline experiments, which portray a 'rule of capture' for establishing ownership with group size equal to 10, achieve an average efficiency of 30%. Experiments that restrict entry, with group size equal to 5, increase average efficiency to 44%. Experiments applying a stock quota show more marked improvement in efficiency, averaging 54%. The stock quota experiments come closest to producing data consistent with subgame perfection."
Rent Appropriation and Groundwater Property-Right Systems in the American West: A Strategic and Laboratory Analysis
(1992) Gardner, Roy; Moore, Michael R.; Walker, James M.
Subsequently Published as: "Ground Water Law in the American West: Economic Modeling and Analysis," Designing Institutions for Environmental and Resource Management, edited by Edna Loehman and Marc Kilgour, Edward Elgar Ltd.,1998. "This paper considers the issue of rent appropriation from a groundwater common property resource under various property-rights systems employed by states in the American West. A benchmark model is constructed with a fixed stock of groundwater and fixed exhaustion time, with a specification based on data from the Ogallala Aquifer. Solving this model for its efficient equilibrium and a subgame perfect equilibrium provides a calibration for comparing rent appropriation from different property systems. The subgame perfect equilibrium accords closely to Texas state law. Among the systems compared are the prior appropriation doctrine (used by most western states), the correlative rights doctrine (adopted in Nebraska, Oklahoma, and some groundwater basins in California), the Arizona Groundwater Management Act of 1980, and the Smith Rule (a rule proposed by Vernon Smith in 1977 for use in Arizona). Each system varies in the nature of aquifer entry rules, individual withdrawal permits, and minimum time-to-exhaustion rules. The paper: (1) models these features as parametric traits of property systems, (2) analyzes individual strategic behavior within this framework, and (3) reports results from laboratory experiments that apply the framework. As states consider groundwater policy reform, the analysis of actual property-rights systems and parallel laboratory results can inform the policy process."
Rent Dissipation and Probabilistic Destruction of Common Pool Resources: Experimental Evidence
(1991) Walker, James M.; Gardner, Roy
"Using experimental methods to test a game theoretic model of destruction in a common pool resource environment, this paper investigates whether the possibility of destruction will significantly alter choice behavior in the resulting game. When there is a nonnegligible probability of destruction at the subgame perfect equilibrium, the common pool resource is in every case destroyed and, in most cases, rather quickly. Even when there is a second subgame perfect equilibrium which is completely safe and yields near optimal rents, subjects do not stabilize at this equilibrium. The consequence of this destruction is in every case a significant loss in rents."
Rent Dissipation in Common Pool Resource Environments: Experimental Evidence
(1989) Walker, James M.; Ostrom, Elinor; Gardner, Roy
"This paper examines the resource environment classified as common-pool resource. The intent is to highlight and more carefully classify the specific forms of behavioral problems encountered in this resource allocation environment, with an emphasis on the particular allocation problem known commonly as 'rent dissipation.' We present evidence from laboratory experiments designed to investigate the robustness of theoretical models of rent dissipation in such environments. Following the theoretical work of such authors as Scott Gordon (1954), we investigate the strength of theoretical models which predict that users of common-pool resources will appropriate units from the resource at a rate which exceeds the point at which marginal returns equal marginal extraction costs. The logic of such models argues that appropriators will ignore the production externalites of their own appropriation and focus only on average returns from the resource. Following this argument, appropriation will take place at a level in which all rents are dissipated. Our experimental results present evidence from a behavioral investment environment designed to capture the key theoretical assumptions of the rent dissipation models. We offer evidence related to the extent of rent dissipation as related to subject experience in the environment, the form of the production technology of the common pool resource, and the size of the appropriation group."
The Role of Communication in Resolving Commons Dilemmas: Experimental Evidence with Heterogeneous Appropriations
(1992) Hackett, Steven C.; Schlager, Edella; Walker, James M.
"Communication has been shown to be an effective mechanism for promoting efficient appropriation in small homogeneous common-pool resource settings. Communication allows appropriators the opportunity to agree on an aggregate appropriation target, and coordinate over the selection of allocation rules. When appropriators are identical, these rules result in identical allocations, which facilitates coordination. We examine the robustness of communication as an efficiency-enhancing mechanism in settings where appropriators differ in size, as measured in appropriation capacity. This heterogeneity creates a distributional conflict over the allocation of access to common-pool resources. This conflict can cause self-governance to fail. We present findings from a series of experiments where heterogeneous endowments are assigned: 1) randomly, and appropriators have complete information, 2) through an auction, and appropriators have complete information, and 3) randomly, and appropriators have incomplete and asymmetric information. These findings are contrasted with allocation rules from the field."
Rules and Games: Institutions and Common Pool Resources (DRAFT)
(1991) Ostrom, Elinor; Gardner, Roy; Walker, James M.
"The central thesis of this book is that individuals jointly using a CPR face incentives leading to harm for themselves and others. The degree of harm depends on the rules they use and the environment in which they make decisions. We formalize this relationship using the framework of institutional analysis and noncooperative game theory. The relationship between rules and games is of fundamental importance to all of the social sciences and particularly when social science is used in policy-making. We intend to explore the general relationship between rules and games and do so by focusing on a broad family of games of considerable substantive importance—the games that appropriators play when they decide upon investment and harvesting activities related to CPRs. We begin with a formal definition for a CPR and a CPR dilemma."
Sanctioning by Participants in Collective Action Problems
(1990) Walker, James M.; Gardner, Roy; Ostrom, Elinor
"This paper will focus on explaining monitoring and sanctioning, since these activities are crucial to an explanation of the findings in all four categories discussed above. In Section II we summarize two examples of field settings that fall into the second category to provide a more detailed view of what this behavior looks like in natural settings. In Sections III and IV we move from field settings into an experimental laboratory setting where a substantial level of control over relevant parameters is achieved. Section III provides a baseline situation of limited access CPRs where appropriators cannot monitor or sanction. In Section IV, we analyze experiments where appropriators monitor each others' behavior and sanction one another if they are willing to expend resources to do so. We find that subgame perfect equilibrium theory does not explain observed sanctioning behavior the field or experimental settings of limited access CPRs."
Social Capital and Cooperation: Communication, Bounded Rationality, and Behavioral Heuristics
(1992) Gardner, Roy; Ostrom, Elinor; Walker, James M.
"Common-pool resources are natural or man made resources used in common by multiple users, where yield is subtractable (rival) and exclusion is nontrivial (but not necessarily impossible). The role of face-to-face communication in CPR situations, where individuals must repeatedly decide on the number of resource units to withdraw from a common-pool, is open to considerable theoretical and policy debate. In this paper, we summarize the findings from a series of experiments in which we operationalize face-toface communication (without the presence of external enforcement). In an attempt to understand the high degree of cooperation observed in the laboratory, we turn to a bounded rationality explanation as a starting point for understanding how cooperative behavior can be supponed in decision environments where game theory suggests it will not."
Social Dilemmas: Behavior With and Without Communication
(1997) Walker, James M.
"In the context of individual and group decision making, the presence of social dilemmas imply a divergence between expected outcomes and outcomes that would be optimal from the perspective of the group. The presence of social dilemmas and the degree of predicted suboptimality depends on three components of the decision situation: (1) the existence of a physical domain in which there are externalities in production or consumption, (2) modes of behavior in which individuals make decisions based on calculations that do not fully incorporate the utilities of others, and (3) environments or institutional settings that do or do not create incentives for internalizing such externalities into individuals' decision calculus."
Social Dilemmas: Externalities, Sparse Institutions, and Behavior
(1994) Walker, James M.
"This paper is organized around four principal sections. In the next two sections, the laboratory decision situation, theoretical benchmarks, and summary observations are presented for the public goods and common-pool resource environments. Following this summary discussion, a closer look is taken at individual decisions in these two environments. Following the discussion of experimental results, issues related to differences in behavior across these two social dilemmas situations are addressed."
Trust in Private and Common Property Experiments
(2007) Cox, James C.; Ostrom, Elinor; Walker, James M.
"We report the results from a series of experiments designed to investigate behavior in two settings that are frequently posited in the policy literature as generating different outcomes: private property and common property. The experimental settings closely parallel earlier experimental studies of the investment or trust game. The primary research question relates to the effect of the initial allocation of property rights on the level of trust that subjects will extend to others with whom they are linked. We find that initial endowments as common property lead to marginally greater cooperation or trust than when the initial endowment is fully owned by the first player as private property. Subjects' decisions are also shown to be correlated with attitudes toward trust and fairness measured in post-experiment questionnaires."
Voting on Allocation Rules in a Commons Without Face-to-Face Communication: Theoretical Issues and Experimental Results
(1995) Walker, James M.; Gardner, Roy; Ostrom, Elinor; Herr, Andrew
"An immense outpouring of empirical studies has been published during the past decade focusing on the norms and rules that have evolved or been chosen to govern smaller, relatively homogeneous common-pool resources. In many field settings, the tragedy of the commons has been avoided and robust institutions have been used to govern fragile common-pool resources for several centuries. Empirical studies of existing field settings, while crucial for establishing external validity, are not immune to four threats to establishing a firm explanation of observed cooperative behavior. First, scholars can rarely obtain quantitative data about the potential benefits that could be achieved if participants cooperate at an optimal level or about the level of inefficiency yielded when they act independently. Second, it is thus difficult to determine how much improvement has been achieved as contrasted to the same setting without particular institutions in place. Third, without using expensive time series designs, studies only include those resources that have survived; and, the proportion of similar cases that did not survive is unknown. Fourth, many variables differ from one case to the next. This means a large number of cases is required to gain statistical control of the relative importance of diverse variables. In this regard, the few studies that have attempted cross sectional control using a relatively large number of field cases have produced important results that complement individual case studies."
Voting on Allocation Rules in a Commons: Predictive Theories and Experimental Results
(1997) Walker, James M.; Gardner, Roy; Ostrom, Elinor; Herr, Andrew
"An immense outpouring of empirical studies has been published during the past decade focusing on the norms and rules that have evolved or been chosen to govern smaller, relatively homogeneous common-pool resources. In many field settings, the tragedy of the commons has been avoided and robust institutions(Shepsle, 1989) have been used to govern fragile common-pool resources for several centuries (Netting, 1981; E. Ostrom, 1990). Empirical studies of existing field settings, while crucial for establishing external validity, are not immune to four threats to establishing a firm explanation of observed cooperative behavior. First, scholars can rarely obtain quantitative data about the potential benefits that could be achieved if participants cooperate at an optimal level or about the level of inefficiency yielded when they act independently. Second, it is thus difficult to determine how much improvement has been achieved as contrasted to the same setting without particular institutions in place. Third, without using expensive time series designs, studies only include those resources that have survived; and, the proportion of similar cases that did not survive is unknown. Fourth, many variables differ from one case to the next. This means a large number of cases is required to gain statistical control of the relative importance of diverse variables. In this regard, the few studies that have attempted cross sectional control using a relatively large number of field cases have produced important results that complement individual case studies."