A Classroom Experiment about Common-Pool Resources and Local Environmental Control

Abstract

"This article describes a hand-run classroom experiment that illustrates the basic principles behind common-pool resource management, including the 'Tragedy of the Commons' and a comparison of strategies intended to facilitate cooperation in managing a shared environmental resource. The experiment can also be used to illustrate concepts such as Pareto efficiency and Nash equilibrium, public goods, factors which motivate self-interested and group-oriented behavior, and the potential for externally imposed regulations to crowd-out civic-minded behavior. The experiment has been run successfully in a variety of courses and disciplines at both the undergraduate and graduate levels, including introductory and intermediate microeconomics, a public finance course for Masters students in a public policy and administration program, and a natural resources conservation course. Other courses for which the experiment would be appropriate include environmental economics and game theory. The same experiment has also been used in the field where the participants are actual common-pool resource users with results similar to those in the classroom."

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Keywords

common pool resources, experimental economics, game theory, public goods and bads, institutions, regulation

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