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Event Details

  • Tuesday, November 7, 2017
  • 15:15 - 15:45

On Groundwater Usage: Theory and Evidence

We use game theory and individual-level data to study usage of groundwater. We propose a dynamic game theory model to describe how individuals behave when resource usage induces social costs, and how they anticipate their participation in resource depletion. The main prediction of the theory reflects the key issue underlying tragedy of the commons, namely, free-riding behavior. We test our predictions on a unique, large-scale dataset from one of the most agriculturally productive districts in the US where farmers irrigate crops from a common-groundwater resource. We study interaction effects and propose some new policy arguments.