EVIDENCE-BASED RESEARCH ON CHARITABLE GIVING
SPI Funded Voluntary and Mandatory Provision of
Common Pool Resources with Heterogeneous
Appropriators
Fatemeh Momeni
Purdue University
SPI Working Paper No.: 131 - SPI
January 2015
Voluntary and Mandatory Provision of Common Pool
Resources with Heterogeneous Appropriators∗†‡
Fatemeh Momeni
Purdue University
January 2015
Abstract
Common pool resource (CPR) users often face two types of problems to solve:
provision problems and appropriation problems. This paper presents a laboratory experiment to study the choices of CPR users under different provision schemes, in a
heterogeneous environment. In the first two treatment conditions, the level of contribution to the provision process is determined exogenously: in the regressive treatment,
poor and rich individuals pay equal amounts to the provision of the resource, and in
the progressive treatment, the entire provision cost is paid by rich members. Finally, in
the endogenous condition subjects voluntarily choose how much to contribute through
the Provision Point Mechanism. The experimental results provide strong evidence for
inequality aversion motivating subjects’ decisions. Interestingly, inequality aversion
motivates the subjects’ choices differently in the exogenous and in the endogenous provision conditions: in the regressive and the progressive treatments inequality aversion
motivates the extraction choices while in the endogenous treatment inequality aversion
motivates subjects’ contribution decisions but not their extraction decisions.
∗
This research is funded by Science of Philanthropy Initiative and John Templeton Foundation.
I am grateful to Timothy Cason for his continuous guidance and encouragement. I would like to thank
Sandra Maximiano, Steven Wu and Mohitosh Kejriwal for valuable comments and discussions. All remaining
errors are my own.
‡
Contact: Department of Economics, Purdue University, West Lafayette, IN 47907, USA. Tel: +1 (765)
409-1286. E-mail: [email protected] The latest version of this paper is available at: https://sites.
google.com/site/fatemehmomeni/research
†
1
1
Introduction
Ostrom, Gardner and Walker (1994) classified problems facing Common Pool Resource
(CPR) users into two types: provision problems, which deal with creating the resource,
maintaining it, and improving its production capabilities; and appropriation problems, which
relate to allocating the subtractable flow from the resource among potential users.
It is natural to assume that these two classes of problems are linked to one another.
Ostrom, Gardner and Walker (1994) points out that “the nature of appropriation problem
is affected by how well the provision problem is solved”. The link between provision and
appropriation problems could be explained by the idea that people derive procedural utility
(Frey, Benz and Stutzer (2004)); suggesting that individuals care not only about the outcomes, but also about how those outcomes are achieved. In the case of CPR, the idea of
procedural utility implies that, in addition to the utility that resource users receive from
appropriating the resource, they may derive utility – or disutility – from the way in which
the resource is provided to them. Thus, understanding the interaction between provision
and appropriation problems serves as an essential move towards understanding CPR users’
extraction decisions in facing such social dilemmas.1 Moreover, recent studies have argued
that by accounting for the fact that CPR users often interact with each other in other social
dilemma situations, we can explain some real world observations that are not replicated
in the laboratory setting which study the appropriation problems in isolation.2 One social
dilemma situation through which CPR users interact with each other concerns solving the
provision problem: all users are better off if the resource is provided, and yet each individual
has an incentive to not contribute in the provision process. Therefore, by understanding the
interaction between provision and appropriation problems, we may overcome some shortcomings of previous CPR experiments in creating a laboratory environment that better captures
the properties of CPR in the field settings. Despite recognizing the importance of studying provision and appropriation problems jointly, nearly all previous CPR experiments have
taken the provision of CPR as given, and studied the appropriation problem in isolation.
Many CPRs are provided or maintained through the contributions of their users who
directly or indirectly contribute from their private resources in the provision process. Main1
Previous studies have found evidence that origin of resources affects how people use those resources
(Thaler, 2008; Arkes et al., 1995).
2
See Botelho et al. (2013) for an experimental and Solstad and Brekke (2011) for a theoretical study.
2
tenance, repair and routine operational activities by irrigation system users are examples
of direct contribution of users in the provision process. In some other CPRs, such as
government-run fisheries, national parks and forestries, users indirectly contribute in provision activities, by paying taxes from their wealth to a central authority who runs, manages
and maintains the common resource. CPR users are often heterogeneous in various dimensions such as their wealth, their benefit from appropriating the resource, their ability to
extract from the resource, their outside option, etc. The presence of heterogeneity may
create multiple and conflicting viewpoints about how the provision and appropriation problems should be solved: should poor users pay the same share of the provision costs as rich
users do? Should those who benefit more from extraction, contribute more in the provision
process? Should farmers with more land be allowed to extract more water from irrigation
canals? Should fishers endowed with more fishing equipment be allowed to harvest more from
common fisheries? Viewing the procedures to be fair has been shown to increases people’s
propensity to cooperate in social dilemmas [Trawick (2001)]. Since monitoring appropriation
activities in CPR situations if often very costly, finding a provision scheme that appears fair
and appeals to most users may increase cooperation in conserving and better utilizing the
resource, without allocating a lot of resources into costly monitoring procedures.
In this paper I design a laboratory experiment to explore how different provision mechanisms affect CPR users’ extraction choices in a heterogeneous environment. The heterogeneity is introduced in subjects’ wealth. Rich and poor individuals – with different abilities to
contribute in the provision process – participate in 20 rounds of a provision-appropriation
game. I compare individual decisions under three provision schemes. In the first two treatments, the level of contribution in the provision process is determined exogenously: in the
regressive treatment, all users pay the same share of the cost of providing the resource, while
in the progressive treatment, the entire provision cost is paid by rich individuals.3 4 In the
third – endogenous – treatment, users voluntarily contribute from their wealth to the provision process. Previous studies have found that the endogenous choice of the process increases
3
Equal payment by rich and poor is a special case of regressive tax in the sense that poor individuals pay a
higher portion of their wealth in taxes. There are many examples of regressive provision of common resources
practiced in the field. In the US for instance, many states issue commercial and recreational fishing permits
with fixed fees (See for instance Alaska Department of Fish and Game at http://www.adfg.alaska.gov/, or
Florida Fish and Wildlife Conservation Commission at http://myfwc.com/). Other examples are national
parks and public facilities that charge their users fixed admission fees.
4
In the progressive treatment, rich players pay a higher portion of their wealth in the provision process.
Such practices are also common in the field. For example Trawick (2001) studies water management in
Andean communities in Peru where larger land owners are required to contribute more than small land
owners in provision activities such as repair and maintenance.
3
the level of cooperation.5 By comparing the extraction choices under the endogenous and the
exogenous provision schemes, I explore whether voluntary provision of the resource can lead
to higher level of cooperation in extracting from it. Moreover, studying users’ contribution
choices in the endogenous provision scheme can shed light on their preferences about how
the provision costs of the resource should be divided among its users.
Under the standard assumption of expected money maximization, the way in which
resource is provided and the existing heterogeneity in the provision stage does not impact
users’ extraction choices. However, two behavioral models of inequality aversion and Equity
theory predict different extraction patterns for rich and poor individuals and under different
provision schemes. Equity theory [Adams (1963), Homans (1961), Konow (2003)] suggests
that those who contributed more in the provision of the resource should extract more from
the resource, once the resource is provided for use. Inequality aversion theory (Fehr and
Schmidt 1999) predicts that rich individuals contribute more in the provision of the resource
(in the endogenous treatment), and extract less from the resource to reduce inequality.
The experimental results clearly refute the predictions of the Equity theory and provide
strong evidence for inequality aversion motivating subjects’ decisions. Interestingly, inequality aversion motivates subjects’ choices differently in the exogenous and in the endogenous
provision conditions: in the regressive and the progressive treatments, in which the level of
contribution in the provision process is not subjects’ choice, inequality aversion motivates
the extraction choices – rich subjects extract significantly less than poor subjects do. By
contrast, in the endogenous treatment, inequality aversion motivates subjects’ contribution
decisions – rich subjects contribute significantly more than poor subjects do – but not their
extraction decisions. The fact that inequality aversion motivates the extraction choices in
the exogenous treatments but not in the endogenous treatment suggests that the voluntary
nature of subjects’ previous actions in the provision stage to reduce the inequality in the
endogenous treatment has reduced their degree of discomfort from the inequality. This observation is consistent with the findings of previous experiments about the role of intentionality
in explaining individual choices (Blount 1995; Offerman 2002; Charness 2004).
I do not find a significant difference in aggregate extractions across the three treatment
conditions. At the same time, among the three provision schemes, the level of inequality is
reduced the most under the the progressive provision condition. Thus, if the goal is to reduce
5
Wahl, Muehlbacher and Kirchler (2010); Feld and Frey (2002); Sutter, Haigner and Kocher (2010)
4
the inequality and to preserve the resource at the same time, the progressive provision rule
proves to be the most successful provision scheme among the three that are studied here.
Finally, studying individual responses to the choices made by others reveals an asymmetry
in subjects’ responses to their group members’ choices, depending on their type: subjects
increase their extraction as the same-type players in their group extract more from the
resource, and decrease their extraction as the opposite-type players extract more from the
resource.
This is the first experimental study that compares CPR users’ choices under voluntary
and mandatory provision schemes. It is also the first study that compares different provision mechanisms in a heterogeneous environment. I am aware of three other studies that
investigate the interaction between provision and appropriation problems using laboratory
experiments. The experimental design of the first two papers (Cardenas, Rodriquez and
Johnson (2011) and Janssen, Anderies and Joshi (2011)) are motivated by problems facing
irrigation system users who have asymmetric access to the resource. In both experiments,
subjects first decide how much to contribute to the provision of the resource. The aggregate
contribution level determines the flow of the resource that becomes available for use. Next,
subjects sequentially decide how much to extract from the available flow. Only the flow that
is not extracted by previous (upstream) users is available for use to the next (downstream)
users. Perhaps the closest experimental design to this paper is Cherry, Cotton and Jones
(2013). The authors study the extraction choices of CPR users who first endogenously decide
whether to voluntarily contribute some of their endowments towards the enhancement of the
resource, and then decide how to allocate their remaining endowments between extracting
from CPR and a private alternative with a fixed return. While the first two papers introduce
asymmetry in the appropriation stage, Cherry, Cotton and Jones (2013) is completely symmetric in both stages. In contrast with these three papers, the design of the current paper
introduces heterogeneity in the provision stage and is completely symmetric in appropriation
stage.
An important feature of the experimental environment in the current paper is heterogeneity. Here the heterogeneity concerns differences in the ability to contribute in the provision
of the resource whereas some other forms of heterogeneity in CPR environments have been
explored in previous experimental studies. Hackett, Schlager and Walker (1994) studies the
effect of communication in increasing cooperation among heterogeneous CPR users, who
5
have asymmetric endowments of resources to use in extraction. Margreiter, Sutter and Dittrich (2005) compares coordination on efficient use of a CPR using a voting scheme, between
groups with homogeneous and heterogeneous cost of appropriation. Cardenas, Strandlund
and Willis (2002) designs a CPR experiment in which users are heterogeneous in their return
from their outside options. Finally, Hayo and Vollan (2012) studies the effect of heterogeneity
in real-world income, on extraction behavior of CPR users in a laboratory setting.
The remainder of this paper is organized as follows: section 2, explains the experimental
design and discusses the treatments and the experimental parameters. Section 3, discusses
the equilibrium solutions for purely self-interested player and explores how inequality aversion
and Equity theories change these predictions. Sections 4 and 5, present and discuss the
experimental results and section 6 concludes.
2
Experimental Design, Treatments and Parameters
I design a CPR provision-appropriation experiment to explore how different provision
schemes affect users’ extraction choices. I compare the extraction choices under three provision mechanisms: regressive, progressive and endogenous. Users’ contribution to the provision process is determined exogenously in the regressive and the progressive treatments, and
endogenously in the endogenous treatment.
The experiment is composed of two sequential stages: the provision stage followed by the
appropriation stage. Subjects enter the provision stage with unequal wealth, and according to
the treatment condition – either voluntarily or mandatorily – contribute from their wealth to
the provision process. After the resource is provided, subjects participate in the completely
symmetric appropriation stage in which they decide how to use the common resource. To help
subjects understand the experimental instructions, subjects’ choices are framed as decisions
about the use of a fishery in a given year.6
Below, I explain the design of the two stages of the game and the parameter choices for
each treatment condition.
6
Framed experimental instructions has been previously used in some CPR experiments to help subjects
better understand the characteristics of the game. e.g. Akpalu and Martinsson (2009); Cardenas, Rodrigues
and Johnson (2011) ; Janssen, Anderies and Joshi (2011); Cardenas and Ostrom (2004)
6
Provision Stage: Users enter the provision stage with unequal wealth. Groups are composed of two rich and two poor individuals (n=4) endowed with 160 and 20 experimental
dollars at the beginning of the provision stage. The cost of providing the resource is 67.2
experimental dollars which is collected from the users according to the treatment condition.
The experimental instructions explain to the subjects that the collected fund is used to run
hatcheries essential for provision and preservation of the fishery. In the regressive treatment,
all individuals pay the same share of the provision cost (16.8 experimental dollars) regardless
of their wealth level, and in the progressive treatment, the entire provision cost is paid by
the rich members (33.6 experimental dollars each).
In the third – endogenous – treatment, users endogenously decide how much to contribute
to the provision of the resource through Provision Point Mechanism (PPM). The provision
threshold is kept at the same level of 67.2 experimental dollars and all four individuals, simultaneously and independently choose their contribution levels. If the total contribution by
the group reaches the threshold, the resource is provided for use. To encourage contribution
and increase the likelihood of successful provision, I use the refund rule, meaning that the
contributions are returned to the contributors if the provision is not successful.7 In the case
of unsuccessful provision, the experimental year ends after the provision stage, and the users
only earn their initial wealth.
Some previous studies have established that endogenous choosing of the economic setting
can lead to higher individual cooperation (e.g. Wahl, Muehlbacher and Kirchler (2010); Feld
and Frey (2002), Sutter, Haigner and Kocher (2010), Frey et al (2004)). By comparing
the extraction choices in the endogenous treatment to those in the regressive and progressive
treatments, I explore whether the endogenous choice of the contribution level in the provision
stage can lead to more cooperative choices in extraction from the common resource.
Appropriation Stage: Following the provision stage, all groups in the regressive and the
progressive treatments, and those in the endogenous treatment who successfully provided
the resource enter the appropriation stage. Unlike the provision stage, the appropriation
stage is completely symmetric. The design of the appropriation stage closely follows the
baseline appropriation experiment first introduced by Ostrom, Gardner and Walker (1994),
7
However, in the case of success, the excess contributions are not returned. Thus, groups have to coordinate on contributing no more than the required threshold to reach a more efficient outcome. For more
information about different rebate rules in threshold public good experiment see Marks and Croson (1998).
7
which has been widely used in previous CPR experiments: N individuals with access to the
CPR are each endowed with e = 12 units of endowment of private resource. Each unit of e
can be spent either in extracting from the common resource, or in another private activity
with a fixed return of w = 2.8 The payoff from the appropriation stage to an individual who
uses xi units of e in extracting from the CPR is given by:
Mi (xi ) = w(e − xi ) +
X
X
xi
[a
x
−
b(
xi )2 ].
i
N
P
xi
(1)
i=1
The first and the second terms represent the return from the part of endowment e that
the agent spends in the private activity and in extracting from the common resource. The
payoff from extraction depends not only on individual i’s extraction (xi ), but also on the
P
aggregate group extraction , xi . The quadratic term in the brackets corresponds to CPR
P
production function, F ( xi ). The parameters must be chosen such that for small values of
group extractions, spending the endowments in extracting from the common resource pays
better than the private activity (F 0 (0) = a > w), but if the group extracts too much from the
resource, the outcome is counter-productive (F 0 (N e) = a − 2bN e < 0). The values for the
parameters a(= 18), b(= 0.4), e(= 12) and w(= 2) are taken from Cason and Gangadharan
(2014).
The asymmetric-provision, symmetric-appropriation design of the experiment leaves the
action space identical for all individuals in the appropriation stage. The symmetric design
of the appropriation stage leads to the same equilibrium prediction for extraction choices
by purely self-interested rich and poor players. Thus, any observed differences in extraction
choices by rich and poor must have been caused by behavioral motives resulting from adding
the provision stage to the game.
Information structure: Before entering the appropriation stage, subjects fully observe the
level of contribution in the provision process by all other group members.9 The information
8
In experimental instructions, each unit of private endowment e represents one month in the current
experimental year. Subjects can spend each of the months either in a private activity, or in fishing from the
common fishery.
9
Due to the mandatory nature of contributions in the regressive and progressive treatments, this information is already known by all individuals in these two conditions. However, to keep the information structure
in the three treatments comparable, this information is again reminded to all subjects, before entering the
8
about individual contributions in the provision process is given to the subjects to provide
the grounds for potential behavioral-type players to judge the fairness of the allocations,
when making their extraction choices. Moreover, at the end of each round, subjects are
informed about each individual’s extraction choices and payoffs. Receiving information about
contribution and extraction choices at the individual level regularly happens in the field
(Ostrom, Gardner and Walker 1994). It should be noted that one previous study (Villena
and Zechhetto 2011) finds that providing individual-specific information about subjects’
choices makes subjects less cooperative in solving the appropriation problem. We may thus
expect to observe a similar effect in this experiment as well.10 The provision-appropriation
game is repeated for 20 rounds and subjects remain in the same groups (partner-matching)
for all the 20 rounds of the experiment. The duration of the experiment is public information.
The earning activity: To give subjects a sense of entitlement to their experimental wealth,
I add an earning stage which takes place before the start of the 20-round experiment. Previous studies have shown that earned income, as opposed to windfall income, increases
individuals’ sense of entitlement to their wealth, which plays important roles in everyday
economic decision makings.11 Prior to receiving the instructions for the 20-round experiment, subjects take a 10-question multiple-choice quiz. Quiz questions are chosen from
sample GMAT multiple-choice questions. Subjects are informed that their performance in
the quiz determines the amount of experimental wealth they are going to receive at the
beginning of each round of the experiment that follows. Specifically, subjects are instructed
that half of the participants with higher scores in the quiz receive 160 experimental dollars
and the rest receive 20 experimental dollars, at the beginning of each of the 20 experimental
rounds.12
appropriation stage.
10
Villena and Zechhetto (2011) study CPR users’ extraction choices under different information structures.
They find that individuals make less cooperative choices, when given individual-specific information about
other players’ choices, and conclude that individual-specific information worsens the tragedy of commons.
11
For instance individuals make more generous and more risky choices with windfall money. [Hoffman et
al (1994)]
12
This information is given to motivate subjects to put effort in solving quiz problems. Additionally,
subjects learn the exchange rate between experimental and real dollars before taking the quiz.
9
3
Theoretical Predictions
To make predictions about the extraction and the contribution choices in different treatment conditions, this section stats by finding the equilibrium choices by purely self-interested,
own-payoff maximizing players. Next, it explores how these equilibrium predictions are modified if inequality aversion and Equity theory motivate individual choices, and discusses how
the solutions under these two theories differ under each treatment condition.
3.1
Regressive and Progressive Provision Schemes
In order to find the equilibrium predictions for extraction levels by purely self-interested
individuals, let’s start by considering the appropriation stage. This second stage of the game
is completely symmetric and identical across all treatments. The monetary payoff to an
individual who spends xi units of her endowments in extracting from the common resource
is given by:


 we
Mi (xi ) =
w(e − xi ) +


xi
(a
N
P
xi
P
xi − b(
P
xi = 0
xi )2 ) xi > 0.
i=1
Taking the first derivative from this payoff function and imposing symmetry, it is easy
to verify that the equilibrium level of extraction is achieved when each player spends x∗i = 8
units of her endowment e in extracting from the resource, 13 while the social optimum level
P so
of extraction is reached when the group as a whole, spends
xi = 20 units in extraction.
P so P ∗
Note that
xi < xi (= 8 × 4 = 32).
Adding the provision stage does not change the equilibrium prediction of extraction for
an own-payoff maximizing player. For a self-interested subject, the way in which the resource
is provided is irrelevant to her extraction decisions.
Let’s now explore how the two behavioral theories of inequality aversion and Equity
Theory change the predictions from that of the standard self-interested model.
Not only x∗i is the symmetric equilibrium level of extraction, but the parameters are chosen such that
= 8 is the only equilibrium solution for the own-payoff maximizing player in this environment.
13
x∗i
10
Equity theory [Adams (1963), Homans (1961), Konow (2003)] suggests that the just
allocation is achieved, when each individual’s reward is proportional to her input (∀i, j :
Input
Inputi
= Rewardj j ). If subjects view their contributions to the provision of the resource as
Rewardi
the right input variable, they may use Equity Theory to judge the fairness of the allocations.
In the regressive treatment, in which all four players contributed the same amount towards
the provision of the resource, Equity Theory predicts the same level of extractions by rich
and poor (xrich = xpoor ). In the progressive treatment however, in which rich players paid
the entire provision costs, Equity theory predicts a higher extraction by rich individuals
(xrich > xpoor ; xpoor = 0).
The experimental design imposes inequality in the provision stage. The parameters are
chosen such that this inequality can never be undone regardless of the players’ extraction
choices. So one may conjecture that – for inequality-averse enough players – inequality
aversion motivates the extraction choices. Given that subjects receive full information about
the choices and payoffs of all individuals in their group –which makes payoff comparisons at
individual level feasible– I use Fehr and Schmidt (1999) inequality aversion model to predict
the extraction choices. Fehr and Schmidt (1999) formulates the utility of an inequality
P
P
averse individual as Ui = πi − αi N1−1 j6=i max{πj − πi , 0} − βi N1−1 j6=i max{πi − πj , 0}14 ,
in which πk represents the payoff to individual k. The second and the third terms represent
the utility losses from disadvantageous and advantageous inequality, respectively. A rich
player with high enough βi (advantageous inequality aversion) may increase her utility by
reducing her extraction from the CPR and reducing the initial inequality. Since the initial
inequality between rich and poor is relatively large in both the regressive and the progressive
treatments, inequality aversion theory predicts higher extraction by poor players under both
treatment conditions, for inequality averse enough individuals. Table 1 summarizes the above
predictions.
3.2
Endogenous Provision Scheme
Subjects in the endogenous treatment condition make two sequential decisions. First,
they decide how much to contribute from their unequal wealth to the provision of the resource
14
Here, πi = Wi − Ti + Mi (xi ), in which Wi is individual wealth received at the beginning of the provision
stage, Ti represents individual contribution to the provision process, and Mi (xi ) represents individual payoff
from the appropriation stage.
11
Table 1: Predictions of Inequality Aversion Theory and Equity Theory for the Regressive
and the Progressive Treatments
Regressive
Trich = Tpoor = 16.8
Equity Theory
xrich = xpoor
Inequality Aversion
(For high enough α and β)
xrich < xpoor
Progressive
Trich = 33.6; Tpoor = 0
xrich > xpoor ;
xpoor = 0
xrich < xpoor
(choose Ti ). Next – and if the group successfully provides the resource – individuals decide
how to allocate their endowment of 12 tokens (months) between extracting from the CPR
and the private activity with constant return (choose xi ). To find the equilibrium decisions
of this provision-appropriation game for a purely self-interested individual, I use backwards
induction. Similar to that of the regressive and the progressive treatments, the equilibrium
level of extraction in the second – appropriation – stage is achieved when each player spends
x∗i = 8 units of her endowment in extraction. Playing this equilibrium in the appropriation
stage leads to individual payoff of Mi (x∗i ) = 49.6 experimental dollars from the second stage.
As long as individual contribution does not exceed this payoff, it is worthwhile to contribute
towards providing the resource. However, since the required provision threshold (67.2) is
larger than Mi (x∗i ), a self-interested player will not pay the entire provision costs of 67.2 by
herself.15
The provision stage has one trivial equilibrium in which no-one contributes any amount,
and many other non-trivial equilibria that satisfy three conditions: 1) the resource is proP
vided; 2) the contributions are efficient ( Ti = 67.2) and 3) no individual contribution
exceeds Mi (x∗i ) = 49.6 (∀i : Ti < Mi (x∗i )).
Input
Inputi
= Rewardj j ), we should
If individual decisions are motivated by Equity theory ( Reward
i
observe those individuals who contributed more in the provision stage to extract more from
T
the resource in the appropriation stage ( Txii = xjj ). However, if users are enough inequality
averse, they may increase their utility by making contribution and extraction choices that
result in a reduction in inequality. This suggests that rich individuals with high enough
advantageous inequality aversion (βi ) extract less in the appropriation stage (xrich < xpoor )
or contribute more in the provision stage (Trich > Tpoor ), while poor players with high enough
disadvantageous inequality aversion (αi ) extract more from the resource in the appropriation
15
Note that paying the entire provision cost is only feasible for rich players. Poor players’ wealth (Wpoor =
20) is less than the threshold of 67.2.
12
stage, or contribute less in the provision stage.
4
Experimental Procedure
Experimental sessions were conducted in Vernon Smith Experimental Economics Laboratory (VSEEL) at Purdue University between April 2013 and September 2013. 140 subjects
were recruited through ORSEE system (Greiner (2004)) and the experiment was programmed
on z-Tree (Fischbacher (2007)) software. On average, the sessions lasted for about two hours
and subjects’ earnings ranged from $9 to $45 (including a $4 participation fee) with the average of $20. All subjects were inexperienced in the sense that, no individual had participated
in a previous CPR or public good experiments.
The experimental instructions were given to the subjects in two steps. Upon arriving
at the laboratory, subjects received the instructions for the earning activity. Subject were
informed that their performance in the earning activity determined – with details on the
exact amounts – the initial wealth they were going to receive at the beginning of each of
the 20 experimental rounds. After the earning stage was completed and subjects’ wealth
was realized to them, subjects were given the instructions for the rest of the experiment.
Subsequently, subjects answered five incentivized questions that were designed to test their
understandings of the instructions after which, the 20 rounds of provision-appropriation game
followed. Each subject only participated in one experimental treatment. Upon completion
of each session, subjects were privately paid in cash.
5
5.1
Experimental Results
Contribution Decisions
Prior to entering the appropriation stage, groups in the endogenous treatment decided
how much to contribute from their wealth to the provision of the resource. Over the 20 rounds
of the experiment, groups successfully met the provision threshold of 67.2 experimental
dollars, about 68.85% of the times. The success rate increases to 71.54% over the last 10
rounds.
13
Recall that in the case of unsuccessful provision, contributions were refunded to the
contributors. But, if group contribution exceeded the required threshold, the excess contribution was not rebated and was thus wasted. Conditional on successful provision, the
waste decreases from 8.88 experimental dollars per period per group in the first five rounds,
to 1.68 experimental dollars in the last five rounds. The decrease in the waste reveals that
coordination among group members improves over time.
Figure 1 graphs the average individual contribution (T̄i ) in the endogenous treatment by
rich and poor players over time. Over the 20 rounds of the experiment, on average, rich
players contribute about three times as much as poor players do in the provision process
(T̄rich = 26.64 vs. T̄poor = 8.87).
0
5
Average Contribution
10 15 20 25 30
35
40
Average Contribution- Endogenous
0
5
10
Period
Rich
15
20
Poor
Figure 1: Average Contribution in the Endogenous Treatment
Table 2 presents the results from a regression model that establish the significance of the
difference between contributions by rich and by poor in the provision stage. The left column
combines the data from all groups in the endogenous treatment. And the middle and the
right columns report the effect for the groups that were successful and unsuccessful in meeting
the required threshold separately. Since players’ roles are assigned by their performances in
the earning activity, one might be concerned that the difference between contributions by
rich and poor is originated from the difference in their ability to perform on the GMAT
quiz.16 To control for the effect of ability, I include the quiz scores in the regressions as a
regressor.
16
In other words, we may be concerned that they are the smarter (and not the rich) individuals who are
making more cooperative contribution choices.
14
As the coefficients in the first row of the regression table confirm, rich players contribute
significantly more towards the provision of the resource than poor players do. The higher
contribution by rich cannot be explained by their ability to perform in the GMAT quiz. In
fact the opposite holds true for the unsuccessful groups: while being rich increases the contribution in the provision process, better performance in the quiz, decreases the contribution
1
term indicates that
for the unsuccessful groups. Finally, the positive coefficient for P eriod
17
contributions decrease over time.
Table 2: Effect of Wealth on Individual Contributions in the Endogenous Treatment
Regression Model (Random Effect)
Dependent Variable: Individual Contribution
All Groups Successful Groups
Unsuccessful Groups
Wealth Dummy
17.56***
17.72***
16.77***
(α)
(2.31)
(2.50)
(1.97)
1
0.07***
0.07***
0.02
P eriod
(0.02)
(0.02)
(0.29)
(β)
Quiz Score
-0.54
0.05
-1.08*
(γ)
(0.63)
(0.56)
(0.60)
Constant
9.23***
8.01***
10.47***
(δ)
(1.81)
(1.92)
(2.00)
Observations
988
684
304
Standard Errors are clustered at the group level and reported in parenthesis
∗p < 0.05, ∗ ∗ p < 0.01, ∗ ∗ ∗p < 0.001
1
Contributionit = δ + αW ealthDummyit + β P eriod
+ γQuizScorei + it
The higher contribution by rich players is in line with the findings of previous threshold
public good experiments with heterogeneous endowments (Rapoport and Suleiman 1993).18
As discussed in section 3, the higher contribution by rich in the endogenous treatment
indicates that inequality aversion motivates subjects’ contribution choices.
Result-1: In the endogenous treatment, rich players contribute significantly more towards
the provision of the resource than poor players do. The difference in contributions between
rich and poor is consistent with the predictions of inequality aversion theory.
Using T1 (as opposed to T) allows us to account for higher variations in earlier periods, when learning is
taking place with higher intensity. The result is robust to using either of the variations.
18
One important difference between the current experimental design and that of the threshold public
good experiments is in the uncertainty in returns from contributions. In threshold public good experiments,
payoffs only depend on whether or not the threshold is met (public good is provided), while here, the benefit
from provision, not only depends on successful provision, it also depends on how individuals extract from the
resource, once it is provided. In other words, there is more uncertainty about the benefits from contributions
in this provision-appropriation experiment, which may lower the contributions.
17
15
5.2
5.2.1
Extraction Decisions
Extractions by Type
Inequality aversion and Equity theory predict different extraction pattern for rich and
poor individuals under different provision mechanisms (Table 1). To explore whether these
theories are able to explain the extraction choices in the experiment, I study individual
extraction decisions by each type.
Figure 2 graphs the average individual extractions by rich and by poor players, under each
provision mechanism. In the regressive and progressive conditions, the average extraction
by the poor players lies above that of the rich players in most rounds. To compare the
extraction choices by different types, Table 3 reports the results from random effect Tobit
regressions in which individual extractions are regressed on a wealth dummy, GMAT score
19
, group dummies and a term capturing the time trend. The first ,the second and the
third columns report the regression coefficients for the regressive, the progressive and the
endogenous treatments.
0
5
10
Period
Rich
15
Poor
20
11
5
6
Average Extraction
7
8
9
10
11
Average Extraction
7
8
9
10
6
5
5
6
Average Extraction
7
9
8
10
11
12
Endogenous
12
Progressive
12
Regressive
0
5
10
Period
Rich
15
20
Poor
0
5
10
Period
Rich
15
Poor
Figure 2: Average Extractions by Type
The negative and significant coefficients of the wealth dummies in columns 2 and 3 indicate that in the regressive and the progressive treatments, rich players extract significantly
less than poor players from the resource. This result holds, even after controlling for the
performance in the GMAT quiz. Interestingly, not only the lower extraction by rich players
is not explained by their ability, but the positive and significant coefficients of GMAT scores
19
Since the wealth assignments are not random and are determined by subjects’ performances in the GMAT
quiz, I control for the performance in the quiz by including subjects’ GMAT scores as an independent variable
in the regressions.
16
20
in columns 2 and 3 reveal that the opposite is true: controlling for the wealth levels, those
subjects who performed better in the GMAT quiz extract more from the resource and not
less. This observation is in line with the previous finding in the endogenous treatment that
higher quiz scores predicted more self-centered contribution (lower Ti ) choices in unsuccessful
groups.20 The higher extraction by poor in the regressive and the progressive treatments is
consistent with the predictions of inequality aversion theory from section 3. Moreover, recall
from section 3 that Equity theory predicted that in the progressive treatment, rich subjects
should extract more than poor subjects and in the regressive treatment, we should not see
any difference between extraction choices of rich and poor. However, as the regression results
in Table 3 established, in both the regressive and the progressive treatments, rich players
extract significantly less than poor players do. We thus conclude that Equity theory fails in
correctly explaining subjects’ extraction choices in these two conditions.
Result-2: In accordance with the predictions of inequality aversion, in the regressive and
the progressive treatments rich subjects extract significantly less from the resource than poor
subjects. No evidence exists that Equity theory motivates subjects’ extraction choices in these
two conditions.
As the regression coefficients in the third column of Table 3 reveal, there is no significant
difference in extractions by rich and poor subjects in the endogenous treatment. Importantly,
λ (the coefficient of individual contribution choice) is insignificant, which shows that even
within each wealth group, those who contribute more in the provision stage, are not more
likely to extract more in the appropriation stage. This finding leads us to reject Equity
theory as a possible explanation for subjects’ choices in the endogenous treatment.
Result-3: No significant difference exists in the extraction choices made by rich and poor
players in the endogenous treatment. Equity theory cannot explain the subjects’ choices in
the endogenous treatment.
20
The positive significant coefficient of the quiz score suggests that those who performed better in the quiz
are more likely to make more selfish choices. This may be originated from the fact that individuals with
higher scores are perhaps better at finding the equilibrium solutions, or it may merely be the case that the
smarter individuals are in general more self-centered. The experimental design however, does not allow us
to further disentangle such correlation.
17
Table 3: Effect of Wealth on Individual Extraction Decisions
Random Effect Tobit Regression
Dependent Variable: Individual Extraction
(1)
(2)
(3)
Regressive Progressive Endogenous
Wealth Dummy
-1.44**
-1.62**
0.80
(α)
(0.64)
(0.75)
(0.87)
Quiz Score
0.28*
0.29*
-0.40
(γ)
(0.17)
(0.20)
(0.25)
Condtribution
-0.01
(λ)
(0.02)
1
-0.02***
-0.05***
-0.03***
P eriod
(0.01)
(0.01)
(0.01)
(β)
Constant
8.49***
9.05***
10.82***
(δ)
(0.85)
(1.06)
(1.17)
1.26***
1.52***
1.57***
σu
(0.17)
(0.18)
(0.17)
1.84***
2.45***
1.73***
σe
(0.05)
(0.07)
(0.05)
N
760
911
684
Standard Errors are reported in parenthesis ,
∗p < 0.05, ∗ ∗ p < 0.01, ∗ ∗ ∗p < 0.001
1
Extractionit = δ + αW ealthDummyit + β P eriod
+
γQuizScorei + λContributionit + GroupDummies + it
5.2.2
Group Extractions and Earnings Across Treatments
Figure 3 graphs average aggregate group extractions over time, for each treatment condi4
P
tion.21 Average group extractions start slightly below the equilibrium prediction of
xi =
i=1
8 × 4 = 32 for self-interested agents and gradually increase over time. However, average
group extractions in all treatments stays close to the equilibrium prediction for pure selfinterested agents in most periods. The non-parametric Wilcoxon signed-rank tests cannot
reject the null hypothesis that the mean group extractions equal 32 in any of the treatments
(p-value=0.72 for regressive; p-value=0.18 for progressive; p-value=0.52 for endogenous).22
Result-4: Consistent with the findings of the CPR literature, the aggregate group extractions are not significantly different from the Nash equilibrium prediction of the pure
self-interested agents in any of the treatment conditions.
21
From the groups in the endogenous condition, only those who successfully provided the resource and
actually made extraction decisions are included in the graph.
22
For the non-parametric analysis, I treat the average group extraction over all 60 rounds of the experiment
for each group, as one independent data point.
18
20
22
Average group extraction
24 26 28 30 32 34
36
Average Group Extraction
0
5
10
Period
Regressive
Endogenous
15
20
Progressive
Figure 3: Total Group Extraction in Each Treatment
To compare the extraction choices across treatments, Table 4 reports the results from
random effect Tobit regressions, in which aggregate group extraction is regressed on dummies
for the regressive and the progressive treatments and a term capturing the time trend.
The insignificance of the coefficients for treatment dummies indicate that overall, group
extractions between the regressive and the endogenous, and between the progressive and the
endogenous treatments are not significantly different from each other. The result of a Wald
test reveals that aggregate extractions are not significantly different between the regressive
1
term
and the progressive treatments either (p-value=0.26). The negative coefficient of P eriod
confirms that group extractions increase over time.
Table 4: Random Effect Tobit Regression (Dependent Variable: Aggregate Group Extraction)
Random Effect Tobit
0.24
(1.02)
Dummy for Progressive
-0.92
(0.97)
1
-6.43***
P eriod
(0.71)
Constant
32.93***
(0.71)
σu
2.22***
(0.32)
σe
3.81***
(0.13)
N
589
Standard Errors are reported in parentheses ∗p < 0.05, ∗ ∗ p < 0.01, ∗ ∗ ∗p < 0.001
1
+ gt
extractiongt = δ + αRegressiveg + βP rogressiveg + λ P eriod
Dummy for Regressive
19
Result-5: No significant difference exists between aggregate group extractions across different provision mechanisms.
Conditional on the provision of the resource, similar extractions across treatments would
lead to similar earnings in the appropriation stage. However, taking into account the fact that
– due to insufficient contributions – the provision process in the endogenous treatment is not
always successful, the opportunity to benefit from the common resource occurs with a lower
frequency in the endogenous treatment. This inefficiency leads to lower earnings from the
appropriation stage in the endogenous treatment. Table 5 reports the results from random
effect regressions, regressing group earnings on treatment dummies and a time trend. The
first two columns drop the observations in the endogenous treatment in which the provision
was unsuccessful, and the last two columns pool the data across all observations. In columns
P
1 and 3, the dependent variable is the group earning from the appropriation stage ( Mi ),
which includes the earning from private activity, plus the earning from extractions. And
in columns 2 and 4, the dependent variable is the sum of group earning from the provision
P
P
P
P
stage and the appropriation stage ( πi = Wi − Ti + Mi ).
Table 5: Random Effect Regression- Group Earnings Across Treatments
Dummy for Regressive
Dummy for Progressive
1
P eriod
Constant
Only include the successful groups
in the Endogenous treatment
(1)
(2)
-1.35
2.51
(9.99)
(10.03)
3.38
7.55
(9.52)
(9.56)
51.64***
47.00***
(6.98)
(7.00)
185.55***
475.35
6.89
(6.92)
21.63
21.72
37.61
37.74
0.25
0.25
589
589
Include both the successful
and unsuccessful groups
(3)
(4)
57.81***
39.71***
(15.46)
(12.19)
62.53***
44.75***
(14.71)
(11.61)
46.13***
42.13***
(10.60)
(8.31)
127.42***
439.07***
(10.38)
(8.19)
34.02
26.87
60.52
47.43
24
0.24
665
665
σu
σe
ρ
N
P-value from t-Test
H0 : EarningRegressive =
0.64
0.61
0.76
EarningP rogressive
Standard Errors are reported in parenthesis
* p < 0.05, ** p < 0.01, *** p < 0.001
1
groupearninggt = δ + αRegressiveg + βP rogressiveg + λ P eriod
+ gt
0.69
The insignificance of the coefficients of treatment dummies in columns 1 and 2 – along
20
with large p-values from the Wald tests reported in the last row – indicate that conditional on
the successful provision of the resource, group earnings across treatments are not significantly
different from each other. However not surprisingly, after including the cases of unsuccessful
provision in the endogenous treatment (columns 3 and 4), group earnings in the regressive and
the progressive treatments become significantly higher than the earnings in the endogenous
treatment.
5.2.3
Extractions Choices as Responses to Extractions by Others
To further explore subjects’ extraction decisions, this section studies individual decisions
as a response to the choices made by group members. Specifically, I investigate whether
the subjects respond to the choices of others, and if so, in what manner. To answer this
question, Table 6 reports the regression results from random effect Tobit regressions in which
individual extraction is regressed on previous period extractions by other individuals in the
group by their types, along with a wealth dummy and a term capturing the time trend. The
coefficients in the first and the second rows correspond to the previous period extractions
by the other player of the same type, and the average previous period extractions by the
two players of the opposite type, respectively. The first, the second, the third and the last
three columns correspond to the responses by individuals in all treatments combined, in
the regressive treatment, in the progressive treatment and in the endogenous treatment,
respectively. In each three-column block, the first column pools the data for rich and poor
players, and the second and the third columns reports the responses by the rich and by the
poor players separately.
The regression results reveal that in general, individuals do respond to the extraction
choices made by others in their group, and they do so in an interesting manner. Note that
all the significant coefficients in the first row are positive, while all the significant coefficient
in the second row are negative. This implies that, individuals respond differently to the
extraction choices made by the players of their own type, and the choices made by the players
of the opposite type. Specifically subjects increase their extractions from the resource as the
other player of their own type extracts more, while they decrease their extractions, as players
of the opposite type extract more. The observed asymmetry in individual responses to their
group-mates’ choices suggests that players hold different motives towards other individuals,
depending on whether they happen to be of the same type, or of the opposite type. This
21
finding implies that individual utilities include others’ payoffs (or decisions) asymmetrically,
and differentiate between payoffs (or decisions) of same-type and opposite-type players.
Result-6: Subjects increase their extractions, as the other player of their type extracts
more and decrease their extractions as players of the opposite type extract more from the
resource.
22
23
All
0.02
(0.04)
-0.05
(0.06)
-0.70
(0.47)
-0.05***
(0.01)
8.99***
(0.65)
1.42
(0.19)
1.82
(0.05)
720
-0.03***
(0.02)
6.94***
(0.80)
1.12
(0.20)
1.70
(0.07)
360
-0.06***
(0.02)
10.31***
(0.94)
1.76
(0.33)
1.92
(0.8)
360
Regressive
Rich
Poor
0.00
0.03
(0.05)
(0.06)
0.12
-0.22***
(0.06)
(0.09)
All
0.04
(0.04)
-0.14**
(0.06)
-0.72
(0.54)
-0.08***
(0.02)
9.70***
(0.70)
1.76
(0.21)
2.44
(0.07)
864
-0.06***
(0.02)
7.35***
(0.83)
1.67
(0.28)
2.17
(0.08)
432
All
0.07**
(0.04)
-0.08**
(0.04)
-0.40
(0.52)
-0.06***
(0.01)
8.71***
(0.41)
1.79
(0.20)
1.74
(0.05)
644
0.03
-0.11***
(0.03)
11.50***
(1.02)
1.82
(0.31)
2.70
(0.11)
432
0.01
Progressive
Rich
Poor
0.10*
0.00
(0.06)
(0.06)
-0.02
-0.30***
(0.07)
(0.10)
N
P-values
H0:
0.00
0.06
0.02
0.39
0.21
0.02
0.01
0.18
sametype
Xt−1
othertype
=X̄t−1
sametype
Xt−1
:Extraction by the other player of the same type in the previous period
othertype
X̄t−1
: Average extraction by the two players of the opposite type in the previous period
Standard Errors are reported in parenthesis.
* p < 0.05, ** p < 0.01, *** p < 0.001
σe
σu
Constant
1
P eriod
Wealth
othertype
X̄t−1
sametype
Xt−1
All treatments
All
Rich
Poor
0.05**
0.04**
0.04
(0.02)
(0.03)
(0.03)
-0.07***
-0.04
-0.11***
(0.02)
(0.03)
(0.04)
-0.60**
(0.30)
-0.06*** -0.05*** -0.07***
(0.01)
(0.01)
(0.01)
8.95***
7.98***
9.34***
(0.28)
(0.31)
(0.37)
1.68
1.58
1.79
(0.12)
(0.15)
(0.18)
2.04
1.82
2.26
(0.03)
(0.04)
(0.05)
2228
1114
1114
0.00
-0.04***
(0.02)
8.15***
(0.42)
1.81
(0.27)
1.42
(0.06)
322
0.61
-0.07***
(0.02)
8.82***
(0.48)
1.77
(0.29)
2.01
(0.09)
322
Endogenous
Rich
Poor
0.12***
0.02
(0.04)
(0.05)
-0.13***
-0.03
(0.04)
(0.06)
Table 6: Random Effect Tobit Regressions- Responses to the Extraction Choices Made by Other Group Members
6
Discussion
As discussed in section 3, the experiment has specific behavioral predictions from inequality aversion and Equity theories. The experimental results presented in section 5 established
that the predictions of Equity theory are clearly refuted in all treatment conditions. In the
regressive and the progressive treatments, in which subjects’ level of contribution in the
provision process is set exogenously, higher contributions in the provision stage does not
translate to higher extractions from the resource in the appropriation stage. In the endogenous treatment condition, in which users endogenously choose their level of contributions
in the provision process, those who voluntarily contribute more in the provision stage do
not extract more from the resource, once the resource is provided for their use. Thus, if
users’ level of contribution in the provision process is exogenously determined by a central
authority, through setting the level of taxes and fees that users pay, to cover the costs of
providing and maintaining the common pool resource, the findings of this experiment suggest
that using a provision rule that makes wealthier users pay a higher share of the costs does
not necessarily lead them to extract more intensively from the resource as Equity theory
suggests.
Unlike the predictions of Equity theory, the results presented in section 5 showed that
subjects’ choices in the experiment seem to be well aligned with the predictions of inequality
aversion theory. Interestingly, subjects in the endogenous treatment act on their inequality
aversion motives differently than those in the exogenous treatments: in the regressive and
the progressive treatments, in which the level of contribution in the provision process is not
subjects’ choice, inequality aversion motivates the extraction choices (rich subjects extract
less than poor subjects do); and in the endogenous treatment, in which subjects get to
voluntarily choose their level of contribution in the provision process, inequality aversion
only motivates the contribution choices (rich subjects contribute 3 times as much as poor
subjects do).
To better understand why inequality aversion motivates the contribution choices in the
endogenous treatment but the extraction choices in the two exogenous treatments, let’s
compare subjects’ extraction choices in the progressive and in the endogenous treatments.
Recall that in the progressive treatment, the entire (100%) provision cost was paid by the rich
players, while in the progressive treatment, rich players pay only 75% of the provision cost
(Result-1). Thus, when entering the appropriation stage, the degree of inequality between
24
rich and poor is higher in the endogenous than it is in the progressive treatment. If the
degree of inequality was the only factor determining whether inequality aversion motivates
the extraction choices or not, we should observe the difference between extractions by rich and
by poor subjects to be higher in the endogenous treatment. Instead we observe no significant
difference in extractions by rich and poor in the endogenous treatment but significantly
higher extractions by rich players in the progressive treatment. Therefore, beside the degree
of existing inequality, whether or not subjects had previously voluntarily taken action in
reducing inequality seems to play an important role in determining if subjects are going
to act on their inequality aversion motives in the appropriation stage. In other words, this
observation suggests that the fact that subjects in the endogenous treatment have previously
taken actions against inequality seems to reduce their discomfort about the current level of
inequality.23
7
Conclusion
This paper uses a laboratory experiment to explore how different ways of providing Common Pool Resources, affect their users’ extraction choices in a heterogeneous environment.
Three experimental treatments are run in the lab through which, subjects either voluntarily
(endogenous treatment) or mandatorily (regressive and progressive treatments) contribute
to the provision of the resource, prior to making extraction decisions. To my knowledge,
this is the first experimental study that compares CPR users’ choices under voluntary and
mandatory provision schemes. It is also the first study that compares different provision
mechanism in a heterogeneous CPR environment.
Once the resource is provided, I don’t find any significant difference in aggregate group
extractions across treatments. However, groups in the endogenous treatments fail to successfully provide the resource in about 30% of the times. The inability in successfully providing
the resource in some groups leads to lower earnings, and causes the endogenous treatment to
23
This result is consistent with the findings of previous experiments about the role of intentionality in
individual decision-makings. Blount (1995) finds that responders in the ultimatum games accept lower offers
more often when offers are randomly generated than when they are chosen by another subject. Offerman
(2002) finds that helpful (hurtful) actions are rewarded (punished) more frequently when they are intentional
as opposed to when they are randomly generated. Charness (2004) finds that employees in a gift exchange
game provide more(less) effort at high(low) wages when the wage is determined by the employer compared
to when it is randomly generated.
25
be less efficient than the treatments in which contribution levels are determined exogenously.
Inequality aversion and Equity theories, each predict different extraction patterns under
each treatment condition. While I do not find any evidence for Equity theory motivating
individual decisions, there exists clear evidence that inequality aversion guides choices: in
the two treatments in which provision rule is determined exogenously, rich players reduce
the initial inequality by extracting less than poor players from the resource. However, in
the endogenous treatment, inequality aversion affects contribution – instead of extraction –
decisions: rich players contribute three times as much as poor players do to the provision of
the resource, and there is no difference in the extraction choices made by rich and poor.
Studying individual responses to the choices made by others in their group reveals an
asymmetry in players’ responses to their group members’ choices, depending on their type:
individuals increase their extractions, as same-type players in their group extract more from
the resource, and decrease their extractions, as opposite-type players extract more from the
resource.
While the results of any single experimental study should be regarded cautiously, the
findings of this paper suggest several important policy implications. Many common pool
resources are managed by government agencies who use tax revenues, collected from resource
users to finance the provision and the maintenance costs. The presence of heterogeneity
among resource users may create conflicting views about how the provision costs should
be shared (e.g. Reuben and Riedl 2013; Nikiforakis, Noussair and Wilkening 2012). The
findings of this paper show that, unlike the predictions of Equity theory, having the wealthier
users pay a higher share of common resource provision costs does not make them act less
cooperatively in extracting from it. Not only the progressive provision scheme did not lead
to less optimal group outcomes, it decreased the inequality between rich and poor in this
experimental environment. Of course, studying the effect of different of provision schemes
on CPR users’ extraction choices in a laboratory environment is only a first step towards
fully understanding how such policies affect individual decisions in the more complex field
settings.
26
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