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Potential disasters can turn the tragedy into success

Lindahl, T., A.-S. Crépin and C. Schill (2016). Environmental and Resource Economics 65(3), 657-676. doi. 10.1007/s10640-016-0043-1

Abstract:

This paper presents a novel experimental design that allows testing how users of a common-pool resource respond to an endogenously driven drastic drop 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, compared to groups facing a logistic growth function. Even among cooperative groups there is a significant behavioral difference, 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. We argue that the insights generated by this study can be seen as one of many, but nevertheless important, contributions towards an increased understanding of the interactions between human behavior and the environment in common-pool resource systems.

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Keywords: Common-pool resources; Laboratory experiments; User behavior; Renewable resources; Thresholds; Non-concave dynamics

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