Dept. of Economics UNIVERSITY of ALASKA ANCHORAGE Fisheries and Experimental Economics aka “The Beans Game” Gunnar Knapp Jim Murphy
Feb 24, 2016
Dept. of Economics
UNIVERSITY of ALASKA ANCHORAGEFisheries and Experimental
Economics
aka “The Beans Game”
Gunnar KnappJim Murphy
Rent Dissipation
Economic Rent• Net value from the use of a resource• Earnings or profits• = (Quantity harvested x Price received) – Cost of harvest
Dissipation• Waste by misuse, squander
Rent Dissipation• Loss of earnings due to inefficient choices• Due to the rules or policies governing the fishery
Sources of rent dissipation RENT = (Quantity harvested x Price received) – Cost of harvest
Demo #1
Resource Driven
Demo #2
Cost Driven
Demo #3
Value Driven
Demo #1 – Resource-driven rent dissipation 3 periods At the end of each period, amount in bowl 2x
• Up to capacity of the bowl Efficient outcome
• Periods 1 & 2: harvest ½ • Period 3: take it all (no future)
View results….
Tragedy of the Commons
Conditions for successful self-governance of shared resources• Hundreds of experiments• “local” fisheries can avoid tragedy,
but may also overharvest. Competitive, commercial
fisheries likely to over-harvest• Why?
Resource-driven Rent Dissipation
Elinor Ostrom2009 Nobel Prize
Rent = Quantity harvested x Price received – Cost of harvest
Overharvesting reduces biomass
Evolution of fisheries management institutions Open access / Common-pool resource
• Over-fishing Tragedy of the Commons Regulated Restricted Access (“competitive fishery”)
• Aggregate Quota (addresses CPR problem)• Vessels compete for share of Aggregate Quota
• Restricted access to fishery (harvesting permit)• Limits on use of some inputs, but not all
• Derby-style “race for fish”
Demo #2 – Cost Driven Rent Dissipation
Choose a spoon• Larger spoons cost more, but can also harvest more
What is the efficient outcome? Your results… Excessive use of inputs (“over-capitalization”)
• Race for fish or “derby” Spoons are bigger & more costly than necessary
• Getting in each other’s way, spills
Rent = Quantity harvested x Price received – Cost of harvest
Excessive use of inputs increases costs
Harvesting experiment
8 subjects per group 20 cups of beans in large bowl Revenue is $1/cup.
Subjects need to purchase “gear” to harvest the beans.• Select a measuring cup• Larger gear costs more.
Gear (measuring cups)
Scoop Size(cups)
Cost(scoops)
Cost(cups)
1/8 0.551/4 1.091/3 1.461/2 2.192/3 2.923/4 3.281 4.38
TotalPer Person 2.5 cups
Cost of your harvesting scoop is:
4.375
Amount of beans in the bowl20.0 cups
Nonlinear social dilemma payoff table
1 2 3 4 5 6 7 8 9 101 9.56 12.46 13.69 14.25 14.48 14.52 14.44 14.28 14.06 13.81 0.142 6.23 9.13 10.69 11.58 12.10 12.38 12.49 12.50 12.43 12.29 0.293 4.56 7.13 8.69 9.68 10.31 10.71 10.94 11.05 11.06 11.01 0.434 3.56 5.79 7.26 8.25 8.92 9.38 9.66 9.83 9.91 9.91 0.575 2.90 4.84 6.19 7.14 7.81 8.28 8.60 8.81 8.92 8.96 0.716 2.42 4.13 5.35 6.25 6.90 7.38 7.71 7.93 8.06 8.13 0.867 2.06 3.57 4.69 5.52 6.15 6.61 6.94 7.17 7.31 7.39 1.00
64 -0.13 -0.27 -0.42 -0.57 -0.74 -0.91 -1.09 -1.28 -1.47 -1.67 9.1465 -0.13 -0.28 -0.43 -0.59 -0.76 -0.93 -1.12 -1.31 -1.51 -1.71 9.2966 -0.14 -0.29 -0.44 -0.61 -0.78 -0.96 -1.14 -1.34 -1.54 -1.74 9.4367 -0.14 -0.30 -0.46 -0.62 -0.80 -0.98 -1.17 -1.37 -1.57 -1.78 9.5768 -0.15 -0.30 -0.47 -0.64 -0.82 -1.00 -1.20 -1.39 -1.60 -1.81 9.7169 -0.15 -0.31 -0.48 -0.65 -0.84 -1.03 -1.22 -1.42 -1.63 -1.84 9.8670 -0.16 -0.32 -0.49 -0.67 -0.85 -1.05 -1.24 -1.45 -1.66 -1.88 10.00
My Input Choice
Tota
l Inp
ut C
hoic
e of
Oth
er G
roup
Mem
bers
Average Input Choice of Other G
roup Mem
bers
Concerns about payoff tables
We don’t live in a world of payoff tables Frames how a person should think about the game A lot of numbers, hard to read Too abstract??
We’re not interested in cooperative behavior
soci
al o
ptim
um
Nas
h eq
.
Mean=4.6
05
1015
Per
cent
0 1 2 3 4 5 6 7 8Extraction Effort
(uses payoff table)CPR experiments in Colombia
Treatments
Derby• Subjects compete for a share of total harvest
Individual Quota• Subjects guaranteed a fixed share
Percent of beans that are spilled in Derby0
510
Per
cent
of o
bser
vatio
ns
10 20 30 40 50Percent of Beans Spilled
Mean = 27%$5.40 per period spilled(= $0.68/person)
05
1015
20P
erce
nt
-3 -2 -1 0 1 2EarningsUSD
Derby Earnings – Rents are almost fully dissipated
Mean = $0.1517% were < 0
Salmon Fishing in Bristol Bay, Alaska
Competing for limited space in the best place to catch fish—getting in each other’s way.
In Bristol Bay, although boats are restricted to 32’ in length, over time fishermen have built wider and taller boats in an effort to catch a larger share of the available fish.
Boat costs have increased without any corresponding increase in catch.
Old 32’ boat (1970s)New 32’ boat (1990s)
(Photograph by Norm Van Vactor)
Experimental design . . . All subjects use the same size scoops and have no costs.
Subjects can choose between delivering to a “near” pitcher or a “far” pitcher
They get paid a higher price for beans delivered to the far pitcher
But because it takes longer they may not harvest as much if they deliver to the “far” pitcher
This subject’s
“far pitcher”
“near pitchers”
Three short video clips of the experiment
CLIP #1: A “choice” round with a low price for the “far” pitcher. Most subjects deliver to their “near” pitcher.
Note that subjects fish as they can and spill a lot of beans.
CLIP #2: A “choice” round with a high price for the “far” pitcher. Some subjects deliver to their “far” pitcher.
Note that subjects fish as they can and spill a lot of beans.
CLIP #3: A “quota” round. Most subjects deliver to the “far” pitcher.
Note that subjects fish more slowly and carefully and spill fewer beans.