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Potential disasters can turn the tragedy into success

Therese Lindahl, Anne-Sophie Crépin and Caroline Schill. 2014.

Abstract:

This paper presents a novel experimental design that allows testing how users of a common resource respond to potential endogenously driven drastic changes in the supply of the resource. We show that user groups will manage a resource more efficiently when confronted with such a non-concave resource growth function. Even among cooperative groups there is a significant difference in behavior, although theory predicts there should not be. We argue that effectiveness of communication is endogenous to the problem; the threat of reaching a critical tipping point, beyond which the growth rate will drop drastically, triggers more effective communication within the group, enabling stronger commitment for cooperation and more knowledge sharing, which together explains the results.

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