Rent Dissipation and Probabilistic Destruction of Common Pool Resources: Experimental Evidence

Abstract

"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."

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Keywords

common pool resources, user fees, game theory, modeling

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