Can genetic algorithms explain experimental anomalies? An application to common property resources



N

where c(xi) 2.5xi is the cost of the effort, X =x is the group effort, and f (X) is the group
i

1

revenue. Group revenues are shared according to the relative effort — of each individual.

X

The function f(X) is continuous in R+, increasing in X[0, 92], decreasing for X>92, and with

a lower bound at -200:

1  — X - -1 X2,

f ( x M 2    16 .   .

200 [ e -00575( x-184)


-1],


ifX184

ifX184


(2)


From the first-order conditions to maximize earnings —i- = 0, one can derive the best
xi

response functions xi * = 72 - 2 X - i, where X- i


N

= xj . The Nash equilibrium is unique and
ji


symmetric and leads to an aggregate outcome of X*=128 and an individual outcome of xi=16
i. Group profits at the Nash equilibrium are just 39.5% of the potential profits (128/324).
This result is standard in the renewable resource literature (Clark, 1990).

Common-pool resource appropriation is very similar to a Cournot oligopoly when xi is
interpreted as the quantity produced and
f(X) as the aggregate market profits. As in the
adopted design the users of the resource are more than two, a richer set of individual
behaviors may be generated. Such individual behavior has been reported in detail in Casari
and Plott (2003).

Four sessions of 32 periods were run. Agents face the same incentive structure for the
length of a session. No communication was allowed among subjects and at the end of each
period they could observe the aggregate outcome but not the individual choices of others.
The experimental results are summarized below in three points relating to aggregate resource
use, variability in aggregate resource use, and individual heterogeneity, respectively:



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