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Strategic Exploitation of a Common-Property Resource Under Rational Learning About its Reproduction

Author

Listed:
  • Christos Koulovatianos

    (CREA, Université du Luxembourg)

Abstract
We build a workable game of common-property resource extraction under rational Bayesian learning about the reproduction prospects of a resource. We focus on Markov-perfect strate- gies under truthful revelation of beliefs. For reasonable initial conditions, exogenously shif- ting the prior beliefs of one player towards more pressimism about the potential of natural resources to reproduce, can create anti-conservation incentives. The single player whose be- liefs have been shifted towards mor pessimism exhibits higher exploitation rate than before. In response, all other players reduce their exploitation rates in order to conserve the resource. However, the overall conservation incentive is weak, making the aggregate exploitation rate higher than before the pessimistic shift in beliefs of that single player. Due to this weakness in strategic conservation responses, if the number of players is relatively small, then in cases with common priors, jointly shifting all players' beliefs more pessimism exacerbates the commons problem.

Suggested Citation

  • Christos Koulovatianos, 2014. "Strategic Exploitation of a Common-Property Resource Under Rational Learning About its Reproduction," DEM Discussion Paper Series 14-06, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:14-06
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    References listed on IDEAS

    as
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    16. Antoniadou, Elena & Koulovatianos, Christos & Mirman, Leonard J., 2013. "Strategic exploitation of a common-property resource under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 28-39.
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    Cited by:

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    2. Florian K. Diekert & Emmi Nieminen, 2017. "International Fisheries Agreements with a Shifting Stock," Dynamic Games and Applications, Springer, vol. 7(2), pages 185-211, June.
    3. Caleb M. Koch & Heinrich H. Nax, 2022. "Groundwater Usage and Strategic Complements: Part I (Instrumental Variables)," Games, MDPI, vol. 13(5), pages 1-19, October.
    4. Diekert, Florian K., 2017. "Threatening thresholds? The effect of disastrous regime shifts on the non-cooperative use of environmental goods and services," Journal of Public Economics, Elsevier, vol. 147(C), pages 30-49.

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    More about this item

    Keywords

    renewable resources; resource exploitation; non-cooperative dynamic games; Bayesian learning; stochstic games; commons; rational learning; uncertainty; beliefs;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General

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