The Effect of Environmental Uncertainty on the Tragedy of the Commons


Games and Economic Behavior

November 2013, vol. 82, pp.240-253

Departments: Information Systems and Operations Management, GREGHEC (CNRS)

Keywords: CPR games, Environmental uncertainty, Risk and ambiguity, The tragedy of the commons

We model a common pool resource game under environmental uncertainty, where individuals in a symmetric group face the dilemma of sharing a common resource. Each player chooses a consumption level and obtains a corresponding share of that resource, but if total consumption exceeds a sustainable level then the resource deteriorates and all players are worse-off. We consider the effect of uncertainty about the sustainable resource size on the outcome of this game. Assuming a general dynamic for resource deterioration, we study the effect of increased ambiguity (i.e., uncertain probabilities pertaining to the common resource's sustainable size). We show that whereas increased risk may lead to more selfish behavior (i.e., to more consumption), increased ambiguity may have the opposite effect