Decentralized management of common property resources: experiments with a centuries-old institution
For centuries, villages in the Alps employed a special system for managing their common properties. Individual users could inspect other users at their own cost and impose a predetermined sanction (a fine) when a free rider was discovered. The fine was paid to the user who found a violator. Experiments with the institutions demonstrate that this mechanism considerably improves efficiency of resource use. The classical model of identical selfish agents does not capture the data as well as a model with heterogeneous and linear other-regarding preferences. Altruism and especially potentially dysfunctional behavior, such as spite and mistake, play important positive roles.
© 2002 Elsevier Science B.V. Received 16 October 2000; accepted 17 October 2001. The financial support of the National Science Foundation and the Laboratory of Experimental Economics and Political Science is gratefully acknowledged. We are also deeply appreciative of the collaboration of Stephen Van Hooser who developed the software program and helped extensively with the experiments. Many thanks to Giangiacomo Bravo, Anthony Kwasnica, David Messick, Robert Moir, William Morrison, Alvaro Gonzalez Staffa, Leslie Title, James Walker, Roberto Weber and an anonymous referee for their suggestions. This paper has benefited from comments from participants at the ESA meeting in Lake Tahoe, Nevada, University of Trento, Italy, and IASCP conference at Indiana University, Bloomington, University of Pittsburgh and CERGE-EI in Prague.