Agents Monitoring Each Others

The role of a specific institution in avoiding a "tragedy of the commons" situation in a common pool-resource environment is studied experimentally. The resource users privately decide their own exploitation level and then, once the group outcome is revealed, can choose to select other individuals for inspection. At a cost, the inspector can view the decision of any individual. If the inspected individual has exploited the resource excessively, relative to a publicly known amount, a fine is imposed and paid to the inspector. The rules, called Carte di Regola, were modeled after an historical case of self-governed rural communities. The impact of the rules is a dramatic increase in efficiency over the no rule case but still less than 100%. As part of an attempt to understand the nature of the impact of the rules the paper focuses on models of individual agent’s choices. The patterns of results relative to the classical Nash model are similar to other experiments. The model does well, except for the fact that contributions to the public good are less than Nash equilibrium amount. However, when the environment is changed to allow sanctions, contributions above the Nash equilibrium are observed. This paradoxical “flip” in behavior is explained by a non classical model in which spite plays a role in preferences and in which agents are heterogeneous. The model of asymmetric, other regarding agents also does relatively well in predicting patterns of individual choices such as the choice to inspect and sanction others. Efficiency is improved along with the strength of sanctions and the patterns of individual choices are consistent with the non classical model.