Exogenous Change in the Regeneration of a Common Pool Resource and its Effect on Cooperation and Efficiency

Abstract: The natural sciences explain how climate change affects the provision of ecosystem services. Behavioral economists have studied the effects of institutions and social interaction on cooperation, to prevent over-exploitation of common pool resources. Bridging both disciplines, this paper investigates two intrinsic characteristics of climate change and their effect on resource management. Climate change irreversibly disrupts the balance of ecosystems, often causing a continuous decline in resource growth. Abrupt and extreme weather phenomena are also observed, temporarily affecting resource size. Contrasting these effects with stable resource development, we investigate whether resource users respond differently in terms of cooperation and extraction efficiency. By means of a dynamic common pool resource request game with university students, we found differences between the treatments. A continuous decline was associated with falling growth-stock ratios, which increased resource depletion toward the end of the game. A drastic shock affected cooperation negatively, but only temporarily, an effect we attribute to marginal cheating hidden by environmental volatility. Although inconclusive of any long-lasting significant effects on cooperation or efficiency, we contribute with an understanding of the temporary effects of exogenous shocks, for the first time with free communication and uncertainty.