"Follow the data" -- What data says about real-world behavior of commons problems

68 Pages Posted: 22 Nov 2017

See all articles by Caleb M. Koch

Caleb M. Koch

ETH Zurich, Department of Humanities, Social and Political Sciences

Heinrich H. Nax

ETH Zurich; University of Zurich

Date Written: August 29, 2019

Abstract

We test the game-theoretic foundations of common-pool resources using an individual-level dataset of groundwater usage that accounts for 3% of US irrigated agriculture. Using necessary and sufficient revealed preference tests for dynamic games, we find: (i) rejection of the standard game-theoretic arguments based on strategic substitutes, and instead (ii) support for models building on reciprocity-like behavior and strategic complements. By estimating strategic interactions directly, we find reciprocity-like interactions drive behavior more than market and climate. Taken together, we take steps toward developing more realistic models to understand groundwater usage, and related issues pertaining to tragedy and governance of the commons.

Keywords: common-pool resource, groundwater, revealed preference theory, panel data, identification, reciprocity

JEL Classification: C73, D01, D03, Q25

Suggested Citation

Koch, Caleb M. and Nax, Heinrich H., "Follow the data" -- What data says about real-world behavior of commons problems (August 29, 2019). Available at SSRN: https://ssrn.com/abstract=3075935 or http://dx.doi.org/10.2139/ssrn.3075935

Caleb M. Koch (Contact Author)

ETH Zurich, Department of Humanities, Social and Political Sciences ( email )

Zurich
Switzerland

Heinrich H. Nax

ETH Zurich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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