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Payments or persuasion: common pool resource management with price and non-price measures

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Abstract
We use lab experiments to study policies that address common pool resource overuse. We look at a price mechanism, specifically a Pigouvian subsidy, and four non-price interventions. The non-price policies are information alone, information with a normative message, communication alone, and normative messages with communication allowed. In all experiment sessions, no intervention occurs in the first seven and last seven rounds, allowing us to examine the effects of introducing and taking away a policy. The subsidy leads to near-efficient extraction, but surprisingly leads groups that were not over-extracting to also reduce extraction. This over-compliance decreases efficiency, although on net the subsidy is the most efficiency-enhancing intervention. Information provision, communication, normative appeals, and normative appeals combined with communication all reduce over-extraction (though by less than the subsidy) without exacerbating over-compliance; however, the effects of information alone and communication alone are small and not robust. The non-price policies cause a decline in over-extraction of from 0.549% (information) to 11.441% (normative appeals with communication). These effects are of the same order of magnitude as the effects seen in major field studies of conservation messaging. The subsidy has the worst persistence properties (after the intervention ceases), while normative messages with communication have the best.

Suggested Citation

  • Delaney, Jason & Jacobson, Sarah, 2013. "Payments or persuasion: common pool resource management with price and non-price measures," Department of Economics Working Papers 2013-02, Department of Economics, Williams College, revised Mar 2015.
    • Handle: RePEc:wil:wileco:2013-02
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    Cited by:

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    2. Boun My, Kene & Ouvrard, Benjamin, 2019. "Nudge and tax in an environmental public goods experiment: Does environmental sensitivity matter?," Resource and Energy Economics, Elsevier, vol. 55(C), pages 24-48.
    3. Buckley, Penelope & Llerena, Daniel, 2022. "Nudges and peak pricing: A common pool resource energy conservation experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).
    4. Leah H. Palm-Forster & Paul J. Ferraro & Nicholas Janusch & Christian A. Vossler & Kent D. Messer, 2019. "Behavioral and Experimental Agri-Environmental Research: Methodological Challenges, Literature Gaps, and Recommendations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 719-742, July.
    5. Shunji Oniki & Haftu Etsay & Melaku Berhe & Teklay Negash, 2020. "Improving Cooperation among Farmers for Communal Land Conservation in Ethiopia: A Public Goods Experiment," Sustainability, MDPI, vol. 12(21), pages 1-16, November.
    6. Benjamin Ouvrard & Stefan Ambec & Arnaud Reynaud & Stéphane Cezera & Murudaiah Shivamurthy, 2022. "Sharing rules for a common-pool resource in a lab experiment," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(3), pages 605-635, October.
    7. Daniel A. Brent & Lata Gangadharan & Anca Mihut & Marie Claire Villeval, 2019. "Taxation, redistribution, and observability in social dilemmas," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(5), pages 826-846, October.
    8. Shunji Oniki & Melaku Berhe & Teklay Negash, 2020. "Role of Social Norms in Natural Resource Management: The Case of the Communal Land Distribution Program in Northern Ethiopia," Land, MDPI, vol. 9(2), pages 1-17, January.
    9. Oniki, S. & Berhe, M. & Negash, T., 2018. "Roles of the social norms on participation in the communal land distribution program in Ethiopia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277070, International Association of Agricultural Economists.
    10. Sarujan Sathiyamoorthy & Kei Kajisa & Takeshi Sakurai, 2023. "Performance of community‐based tank irrigation system and its determinants: Evidence from Tamil Nadu, India," The Developing Economies, Institute of Developing Economies, vol. 61(3), pages 232-252, September.
    11. Matthew Gibson & Jamie T. Mullins & Alison Hill, 2019. "Climate Risk and Beliefs: Evidence from New York Floodplains," Department of Economics Working Papers 2019-02, Department of Economics, Williams College.
    12. Laura K. Gee & Xinxin Lyu & Heather Urry, 2017. "Anger Management: Aggression and Punishment in the Provision of Public Goods," Games, MDPI, vol. 8(1), pages 1-28, January.
    13. Wolf, Stephan & Dron, Cameron, 2020. "The effect of an experimental veil of ignorance on intergenerational resource sharing: empirical evidence from a sequential multi-person dictator game," Ecological Economics, Elsevier, vol. 175(C).
    14. Benjamin Ouvrard & Anne Stenger, 2017. "Nudging with heterogeneity in terms of environmental sensitivity : a public goods experiment in networks," Working Papers of BETA 2017-36, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    15. Farjam, Mike & Wolf, Stephan, 2021. "If future generations had a say: An experiment on fair sharing of a common-pool resource across generations," SocArXiv 759ks, Center for Open Science.
    16. Penelope Buckley & Daniel Llerena, 2022. "Nudges and peak pricing: A common pool resource energy conservation experiment," Post-Print hal-03765755, HAL.
    17. Jordan F. Suter & Sam Collie & Kent D. Messer & Joshua M. Duke & Holly A. Michael, 2019. "Common Pool Resource Management at the Extensive and Intensive Margins: Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 973-993, August.

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    More about this item

    Keywords

    common pool resource; communication; information; Pigouvian subsidy; social norms; voluntary cooperation; laboratory experiment;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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