Exacerbating the Tragedy of the Commons: Private Inefficient Outcomes and Peer Effect in Experimental Games with Fishing Communities.

Abstract

Economic Experimental Games have shown that individuals make decisions that deviate down from the suboptimal Nash equilibrium. However, few studies have analyzed the case when deviation is above the Nash equilibrium. Extracting from above the Nash equilibrium is inefficient not only socially but also privately and it would exacerbate the tragedy of the commons. That would be the case of a race to the fish when stocks are becoming depleted or driver behavior on a highly congested road. The objective of this study is to analyze private inefficient extraction behavior in experimental games and to associate the type of player and the type of player group with such inefficient outcomes. To do this, we carried out economic experimental games with local coastal fishermen in Colombia, using a setting where the scarcity of the resource allows for an interior Nash equilibrium and inefficient over-extraction is possible. The state of the resource, the type of player and the composition of the group explain, in part, this inefficient behavior.