Join the Leader, Imitate or Follow: Evolutionary Stable Strategies in the Commons

Abstract

"We develop an evolutionary game theory model for a limited access common pool resource. With full disclosure of individual extraction decisions and payoffs we conjecture that subjects will imitate the most successful players’ strategy as long as their payoffs increase. We derive a stable asymmetric equilibrium of Stackelberg leaders and followers that predicts larger aggregate extraction than the symmetric Nash equilibrium but less than the complete rent dissipation scenario. We also formally model the effect of electronic communication on individual behaviour and the stability of coalition formation. As opposed to previous findings in the CPR literature we observe that full information disclosure significantly changes individual behaviour and aggregate use of the common property. Groups that had complete information about other subject’s behaviour extracted significantly more from the CPR, which is consistent with our evolutionary stable equilibrium predictions. Cooperation with E-mail communication is a function of the number of self-identified cooperators and as predicted reduces aggregate extraction but does not reach full efficiency. Full information and communication leads to the formation of smaller coalitions, and, therefore, larger aggregate extraction from the common pool than communication without full information disclosure."