Regulatory stringency and behavior in a common pool resource game: Lab and field experiments

Abstract

Reducing deforestation is one of the key actions necessary to mitigate global climate change. However, in developing countries where there is low enforcement of regulations, it is often difficult to motivate conservation. This paper applies a common pool resource game to look at whether or not changing the level of permitted resource use (i.e. regulatory stringency) affects behavior in a low-enforcement environment. The experiments are conducted in both the lab and the field in Thailand. We study the impact of varying the rule on permitted resource use on resource extraction, individual payoff and payoff distribution. Three levels of resource use are studied – strict, moderate, and relaxed, corresponding to disallowing usage, allowing a moderate amount of use, and allowing a generous amount of use respectively. We find that in our settings, imposing a strict rule is not always the best strategy to manage a common pool resource. In fact, allowing a higher level of resource use yields more desirable social (more equitable payoffs distribution), economic (individual payoff), and environmental (remaining resource stock) outcomes. Thus, our findings suggest that in a low enforcement environment, the design of the rule itself could help motivate conservation behavior by allowing resource users to realize the economic benefits of conservation.