Keeping an Eye on Your Neighbors: Agents Monitoring and Sanctioning One Another in a Common-Pool Resource Environment

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"The role of a specific institution in avoiding a 'tragedy of the commons' situation in a common pool-resource environment is studied experimentally. The resource users privately decide their own exploitation level and then, once the group outcome is revealed, can choose to select other individuals for inspection. At a cost the inspector can view the decision of any individual. If the inspected individual has exploited the resource excessively, relative to a publicly known amount, a fine is imposed and paid to the inspector. The rules were modeled after a historical case of self-governed rural communities in Northern Italy. "The introduction of the sanctioning institution greatly improves the efficiency of the group outcome from the initial level of severe 'tragedy.' The classical model with homogeneous, self-interested agents cannot explain these results. We present a model with heterogeneous, other-regarding agents that is compatible with both the resource use and the inspection decision patterns. In particular, differences in altruism/spite can explain the wide diversity of individual behavior and the willingness of spiteful agents to request unprofitable inspections help explaining the high inspection rate."



IASC, common pool resources--research, institutional analysis, tragedy of the commons--models, game theory, altruism--models, monitoring and sanctioning--models, experimental economics