Incentive Structure of a Common-Pool Resource Situation: A Dynamic Game-Theoretic Model of Irrigation System

Abstract

"The incentive structure of common-pool resource (CPR) situations has often been modeled as the Prisoner's Dilemma Game in which the dominant strategy is of mutual defection. Even though the PD game can give us useful insights with which we can understand the basic social dilemma problems in CPR situations, this line of logic is misleading since it ignores several important facts. First, the incentive structures of CPR situations are not equal so that a single game model cannot explain all incentive structures of CPRs. Second, people using CPRs face two kinds of collective action problems--appropriation problem and provision problem. Without considering the interaction between the two, it is difficult to understand the incentive structure of CPR situations. Third, people will consider the effects of their decisions on future payoffs, as well as on present payoffs, at least to some extent."