An Experiment on Cooperation in a CPR Game with a Disapproval Option

Koffi Serge William Yao

doi:10.3390/g12040083

Abstract

This paper studies the standard version of the approval mechanism with two players in a common pool resource (CPR) extraction game. In the case of disapproval, the Nash extraction level is implemented. The paper investigates, experimentally, the extent to which the Nash threat leads to Pareto-improving extraction levels. Through our experiment, we confirm the effectiveness of the Nash threat in reducing CPR over-extraction. Although participants’ behavior is mainly explained by rational thinking, inequity in payoff can also motivate their behavior. Moreover, we show that there is neither an order effect nor a framing effect. Finally, the reduction persists when the Nash threat is no longer in place.

Highlights

People interact constantly with their peers in social life
We examine in detail the reason that the Nash threat as the disapproval benchmark reduces common pool resource (CPR) over-extraction to understand how subjects behave under the threat of Nash extraction
We observed that the group extractions under the CPR game are larger than under the CPR with the threat of Nash equilibrium (AM) or in sequence 2 of the withdrawal treatment

Summary

Introduction

People interact constantly with their peers in social life. Within these social interactions, many situations arise in which selfish, rational agents are unwilling to sacrifice their benefit to promote cooperation and achieve greater social benefits [1,2]. In the context of a common pool resource (CPR) game, the social dilemma leads to an over-extraction of the resource [7,8,9,10,11,12,13,14,15]. In each period (see Appendix A), each player has an endowment of 10 tokens and decides on his/her CPR extraction level. The rest of his endowment is automatically invested in his/her private activity. In stage 2, all proposals and their corresponding payoffs are made public, and each participant must decide whether to approve or disapprove the proposals. All sessions were conducted in the Laboratory of Experimental Economics of Montpellier

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Discussion

Conclusion