Ambiguity, Social Opinion and the Use of Common Property Resources∗

In this paper we argue that ambiguity, combined with social opinion formation, can be used as the foundation of a game-theoretic equilibrium concept that transcends the standard Nash equilibrium concept, applied to a model of the tragedy of the commons. Our approach sheds light on the international environmental crisis and the relevant ongoing international negotiations. We conclude that social opinion formation in most cases has a significant impact on equilibrium common property resource usage. ∗We thank Cees Withagen for an enlightening discussion with one of the authors about this work and participants in the 2008 International Meetings of the Social Choice and Welfare Society in Montreal for their useful questions. We are very grateful for the remarks and suggestions by three referees that allowed us to substantially improve this paper. †Department of Economics, Temple University, Philadelphia, PA. Email: [email protected] Dimitrios Diamantaras is grateful to Temple University for a sabbatical in the spring 2011 semester, during which some of the work on this paper was performed. ‡Management School, Queen’s University, 25 University Square, Belfast BT7 1NN, UK. Email: [email protected] Financial support from the Netherlands Organization for Scientific Research (NWO) is gratefully acknowledged.