SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

A constant social discount rate cannot reflect both a reasonable opportunity cost of public funds and an ethically defensible concern for generations in the distant future. We use a model of hyperbolic discounting that achieves both goals. We imbed this discounting model in a simple climate change model to calculate constant equivalent discount rates" and plausible levels of expenditure to control climate change. We compare these results to discounting assumptions and policy recommendations in the Stern Review on Climate Change.

Time perspective and climate change policy

Palavras-chave: Discounting; Climate change modeling; Stern Review; Markov Perfect Equilibria; Environmental Economics and Policy; C61; C73; D63; D99; Q54.

Ano: 2007

URL: http://purl.umn.edu/7149

The tendency to foreshorten time units as we peer further into the future provides an explanation for hyperbolic discounting at an intergenerational time scale. We study implications of hyperbolic discounting for climate change policy, when the probability of a climate-induced catastrophe depends on the stock of greenhouse gasses. We provide a positive analysis by characterizing the set of Markov perfect equilibria (MPE) of the intergenerational game amongst a succession of policymakers. Each policymaker reflects her generation’s preferences, including its hyperbolic discounting. For a binary action game, we compare the MPE set to a “restricted commitment” benchmark. We compare the associated “constant equivalent discount rates” and the willingness to pay...

CLIMATE POLICY WHEN THE DISTANT FUTURE MATTERS: CATASTROPHIC EVENTS WITH HYPERBOLIC DISCOUNTING

Palavras-chave: Hyperbolic discounting; Markov Perfect Equilibria; Catastrophic climate change; Uncertainty; Environmental Economics and Policy; Resource /Energy Economics and Policy; C61; C73; D63; D99; Q54.

Ano: 2008

URL: http://purl.umn.edu/42848

Low probability catastrophic climate change can have a signifcant influence on policy under hyperbolic discounting. We compare the set of Markov Perfect Equilibria (MPE) to the optimal policy under time-consistent commitment. For some initial levels of risk there are multiple MPE; these may involve either excessive or insufficient stabilization effort. These results imply that even if the free-rider problem amongst contemporaneous decision-makers were solved, there may remain a coordination problem amongst successive generations of decision-makers. A numerical example shows that under plausible conditions society should respond vigorously to the threat of climate change.

Sacrifice, discounting and climate policy: five questions

Palavras-chave: Abrupt climate change; Event uncertainty; Catastrophic risk; Hyperbolic discounting; Markov Perfect Equilibria; Environmental Economics and Policy; C61; C73; D63; D99; Q54.

Ano: 2007

URL: http://purl.umn.edu/7181

Karp, Larry S..

I provide a selective review of discounting and climate policy. After reviewing evidence on the importance of the discount rate in setting policy, I ask whether standard models tend to exaggerate the sacrifices that the current generation needs to undertake in order to internalize climate damages. I then consider whether the risk of catastrophic damage really overwhelms discounting, in the determination of optimal policy. I revisit the question of how we actually think about the distant future.

Repeated Games Played in a Network

Palavras-chave: Climate change; Discounting; Intergenerational conflict; Catastrophic risk; Hyperbolic discounting; Environmental Economics and Policy; Research Methods/ Statistical Methods; Resource /Energy Economics and Policy; C61; C73; D63; D99; Q54.

Ano: 2009

URL: http://purl.umn.edu/51612

Kinateder, Markus.

Delayed perfect monitoring in an infinitely repeated discounted game is modelled by allocating the players to a connected and undirected network. Players observe their immediate neighbors’ behavior only, but communicate over time the repeated game’s history truthfully throughout the network. The Folk Theorem extends to this setup, although for a range of discount factors strictly below 1, the set of sequential equilibria and the corresponding payoff set may be reduced. A general class of games is analyzed without imposing restrictions on the dimensionality of the payoff space. Due to this and the bilateral communication structure, truthful communication arises endogenously only under additional conditions. The model also produces a network result; namely,...

On the Micro-Foundations of Money: The Capitol Hill Baby-Sitting Co-op

Palavras-chave: Repeated Game; Delayed Perfect Monitoring; Network; Communication; Research Methods/ Statistical Methods; C72; C73; D85.

Ano: 2008

URL: http://purl.umn.edu/6377

Hens, Thorsten; Schenk-Hoppe, Klaus Reiner; Vogt, Bodo.

This paper contributes to the micro-foundation of money in centralized markets with idiosyncratic uncertainty. It shows existence of stationary monetary equilibria and ensures that there is an optimum quantity of money. The rational solution of our model is compared with actual behavior in a laboratory experiment. The experiment gives support to the theoretical approach.

Does Scarcity Exacerbate the Tragedy of the Commons? Evidence from Fishers’ Experimental Responses

Palavras-chave: Micro foundations of money; Optimal; Quantity of money; Financial Economics; C73; C91; C92; E40; E41; E42.

Ano: 2003

URL: http://purl.umn.edu/26320

Maldonado, Jorge Higinio; Moreno-Sanchez, Rocio del Pilar.

Economic Experimental Games (EEGs), focused to analyze dilemmas associated with the use of common pool resources, have shown that individuals make extraction decisions that deviate from the suboptimal Nash equilibrium. However, few studies have analyzed whether these deviations towards the social optimum are affected as the stock of resource changes. Performing EEG with local fishermen, we test the hypothesis that the behavior of participants differs under a situation of abundance versus one of scarcity. Our findings show that under a situation of scarcity, players over-extract a given resource, and thus make decisions above the Nash equilibrium; in doing so, they obtain less profit, mine the others-regarding interest, and exacerbate the tragedy of the...

Past Performance Evaluation in Repeated Procurement: A Simple Model of Handicapping

Palavras-chave: Tragedy of the commons intensified; Economic experimental games; Resource abundance; Resource scarcity; Dynamic effects; Community/Rural/Urban Development; Environmental Economics and Policy; Institutional and Behavioral Economics; Land Economics/Use; Public Economics; D01; D02; D03; O13; O54; Q01; Q22; C93; C72; C73; C23.

Ano: 2009

URL: http://purl.umn.edu/91170

Albano, Gian Luigi; Cesi, Berardino.

When procurement contracts are awarded through competitive tendering participating firms commit ex ante to fulfil a set of contractual duties. However, selected contractors may find profitable to renege ex post on their promises by opportunistically delivering lower quality standards. In order to deter ex post moral hazard, buyers may use different strategies depending on the extent to which quality dimensions are contractible, that is, verifiable by contracting parties and by courts. We consider a stylized repeated procurement framework in which a buyer awards a contract over time to two firms with different efficiency levels. If the contractor does not deliver the agreed level of performance the buyer may handicap the same firm in future competitive...

Halting the Rural Race to the Bottom: An Evolutionary Model of Rural Development to Analyse Neo-endogenous Policies in the EU

Palavras-chave: Repeated Procurement; Handicapping; Relational Contracts; Stick and Carrot Strategy; Political Economy; C73; D82; D44; H57; K12; L14.

Ano: 2008

URL: http://purl.umn.edu/6370

Petrick, Martin.

The article contributes to the understanding of neo-endogenous rural development policies from the perspective of evolutionary game theory. Rural development is modelled as the increasing realisation over time of gains from interaction by rural stakeholders. The model exhibits two dynamically stable equilibria, which depict declining and prospering regions. Neo-endogenous policies are interpreted as stimuli emerging from an external government authority which help decentralised actors to coordinate on the superior of the two equilibria. External intervention may thus be possible and desirable without giving up the autonomy of local decision makers. However, because initial conditions matter, outcomes cannot be planned or engineered from the outside.

Dynamic Programming and Learning Models for Management of a Nonnative Species

Palavras-chave: Rural governance; Neo-endogenous policies; Evolutionary game theory; Collective action.; Community/Rural/Urban Development; C73; R23; R58.

Ano: 2011

URL: http://purl.umn.edu/114764

Eiswerth, Mark E.; van Kooten, G. Cornelis; Lines, Jeff M.; Eagle, Alison J..

Nonnative invasive species result in sizeable economic damages and expensive control costs. Because dynamic optimization models break down if controls depend in complex ways on past controls, non-uniform or scale-dependent spatial attributes, etc., decision support systems that allow learning may be preferred. We compare three models of an invasive weed in California’s grazing lands: (1) a stochastic dynamic programming model, (2) a reinforcement-based, experience-weighted attraction (EWA) learning model, and (3) an EWA model that also includes stochastic forage growth and penalties for repeated application of environmentally harmful control techniques. Results indicate that EWA learning models may be appropriate for invasive species management.

The Repeated Prisoner’s Dilemma in a Network

Palavras-chave: Invasive weed species; Optimal control; Adaptive management; Environmental Economics and Policy; C73; Q57.

Ano: 2005

URL: http://purl.umn.edu/37015

Kinateder, Markus.

Imperfect private monitoring in an infinitely repeated discounted Prisoner’s Dilemma played on a communication network is studied. Players observe their direct neighbors’ behavior only, but communicate strategically the repeated game’s history throughout the network. The delay in receiving this information requires the players to be more patient to sustain the same level of cooperation as in a complete network, although a Folk Theorem obtains when the players are patient enough. All equilibria under exogenously imposed truth-telling extend to strategic communication, and additional ones arise due to richer communication. There are equilibria in which a player lies. The flow of information is related with network centrality measures.

Why are Trade Agreements Regional?

Palavras-chave: Repeated Game; Prisoner’s Dilemma; Imperfect Private Monitoring; Network; Strategic Communication; Centrality; Environmental Economics and Policy; C72; C73; D85.

Ano: 2010

URL: http://purl.umn.edu/96669

Zissimos, Ben.

This paper shows how distance may be used to coordinate on a unique equilibrium in which trade agreements are regional. Trade agreement formation is modeled as coalition formation. In a standard trade model with no distance between countries, a familiar problem of coordination failure arises giving rise to multiple equilibria; any one of many possible trade agreements can form. With distance between countries, and through strategic interaction in tariff setting, regional trade agreements generate larger rent-shifting effects than non regional agreements, which countries use to coordinate on a unique equilibrium. Under naive best responses, regional agreements give way to free trade.

Environmental Options and Technological Innovation: An Evolutionary Game Model

Palavras-chave: Coalition; Coordination; Trade Liberalization; Trade Agreement; Regionalism; International Relations/Trade; F02; F13; F15; C73.

Ano: 2007

URL: http://purl.umn.edu/9102

Antoci, Angelo; Borghesi, Simone; Galeotti, Marcello.

This paper analyses the effects on economic agents' behaviour of an innovative environmental protection mechanism that the Public Administration of a tourist region may adopt to attract visitors while protecting the environment. On the one hand, the Public Administration sells to the tourists an environmental call option that gives them the possibility of being (partially or totally) reimbursed if the environmental quality in the region turns out to be below a given threshold level. On the other hand, it offers the firms that adopt an innovative, non-polluting technology an environmental put option that allows them to get a reimbursement for the additional costs imposed by the new technology if the environmental quality is above the threshold level. The...

Public Security vs. Private Self-Protection: Optimal Taxation and the Social Dynamics of Fear

Palavras-chave: Environmental Bonds; Call and Put Options; Technological Innovation; Evolutionary Dynamics; Environmental Economics and Policy; C73; D62; G10; O30; Q28.

Ano: 2009

URL: http://purl.umn.edu/55289

Antoci, Angelo; Sacco, Pier Luigi; Sodini, Mauro.

In this paper, we develop a simple model of social dynamics governing the evolution of strategic self-protection choices of boundedly rational potential victims facing the threat of prospective offenders in a large population with random matching. We prove that individual (and socially transmitted) fear of exposure to criminal threats may actually condition choices even in the face of objective evidence of declining crime rates, and thereby cause the eventual selection of Pareto inefficient equilibria with self-protection. We also show that a suitable strategy of provision of public security financed through discriminatory taxation of self-protective expenses may actually overcome this problem, and drive the social dynamics toward the efficient no...

Climate Policy When the Distant Future Matters: Catastrophic Events with Hyperbolic Discounting

Palavras-chave: Self-Protection; Fear of Crime; Cultural Selection Dynamics; Replicator Dynamics; Institutional and Behavioral Economics; C73; H23; K49.

Ano: 2010

URL: http://purl.umn.edu/60747

Low probability catastrophic climate change can have a significant influence on policy under hyperbolic discounting. We compare the set of Markov Perfect Equilibria (MPE) to the optimal policy under time-consistent commitment. For some initial levels of risk there are multiple MPE; these may involve either excessive or insufficient stabilization effort. These results imply that even if the free-rider problem amongst contemporaneous decision-makers were solved, there may remain a coordination problem amongst successive generations of decision-makers. A numerical example shows that under plausible conditions society should respond vigorously to the threat of climate change.

Using Evolutionary Game Theory to Examine U.S. and EU Agricultural Policy Institutions

Palavras-chave: Abrupt climate change; Event uncertainty; Catastrophic risk; Hyperbolic discounting; Markov Perfect Equilibria; Environmental Economics and Policy; Risk and Uncertainty; C61; C73; D63; D99; Q54.

Ano: 2007

URL: http://purl.umn.edu/7186

Bullock, David S.; Mittenzwei, Klaus.

A brief review of the history of agricultural policymaking in Europe and the U.S. reveals that major policy changes have often been brought about by major socio-political "shocks," such as the Great Depression and World War II. Such shocks also lead to the creation of institutions that tend to stay in place for long periods after the initial shock has passed. We use evolutionary game theory to model and simulate the effects of socio-political shocks on political institutions.

The Survival of the Conformist: Social Pressure and Renewable Resource Management

Palavras-chave: Agricultural policy; Evolutionary game theory; Agricultural and Food Policy; Q18; D72; C73.

Ano: 2005

URL: http://purl.umn.edu/24538

Tavoni, Alessandro; Schluter, Maja; Levin, Simon.

This paper examines the role of pro-social behavior as a mechanism for the establishment and maintenance of cooperation in resource use under variable social and environmental conditions. By coupling resource stock dynamics with social dynamics concerning compliance to a social norm prescribing non-excessive resource extraction in a common pool resource (CPR), we show that when reputational considerations matter and a sufficient level of social stigma affects the violators of a norm, sustainable outcomes are achieved. We find large parameter regions where norm-observing and norm-violating types coexist, and analyze to what extent such coexistence depends on the environment.

Conservation Payments under Risk: A Stochastic Dominance Approach

Palavras-chave: Cooperation; Social Norm; Ostracism; Common Pool Resource; Evolutionary Game Theory; Replicator Equation; Agent-based Simulation; Coupled Socio-resource Dynamics; Environmental Economics and Policy; C73; Q20; D70.

Ano: 2010

URL: http://purl.umn.edu/96843

Benitez, Pablo C.; Kuosmanen, Timo; Olschewski, Roland; van Kooten, G. Cornelis.

Updated version of REPA Working Paper 2004-05.

Bargaining over governments in a stochastic environment

Palavras-chave: Agroforest systems; Conservation payments; Land allocation; Portfolio diversification; Risk; Stochastic dominance; Environmental Economics and Policy; Land Economics/Use; Resource /Energy Economics and Policy; C73; O54; Q23; Q57; R14.

Ano: 2005

URL: http://purl.umn.edu/37024

Merlo, Antonio.

In this paper we structurally estimate a game-theoretic model of government formation in a multiparty parliamentary democracy. We focus on the timing and the terms of government agreements in the context of a multilateral stochastic model of sequential bargaining with complete information (Merlo and Wilson (1194, 1995)) where efficient delays may occur in the unique equilibrium. Besides showing that our model yields a good fit to the data on the duration of negotiations over government formation as well as government durations in postwar Italy, we use our estimates to quantify the advantage to proposing and to conduct policy experiments to evaluate the effects of changes in the bargaining procedure. We show that the gains from proposing tend to be quite...

Stochastic Stability in the Best Shot Game

Palavras-chave: Noncooperative bargaining; Delay; Government formation; Structural estimation; Duration models.; Political Economy; C41; C51; C73; C78; D72.

Ano: 1996

URL: http://purl.umn.edu/7476

Boncinelli, Leonardo; Pin, Paolo.

The best shot game applied to networks is a discrete model of many processes of contribution to local public goods. It has generally a wide multiplicity of equilibria that we refine through stochastic stability. In this paper we show that, depending on how we define perturbations, i.e. the possible mistakes that agents can make, we can obtain very different sets of stochastically stable equilibria. In particular and non-trivially, if we assume that the only possible source of error is that of an agent contributing that stops doing so, then the only stochastically stable equilibria are those in which the maximal number of players contributes.