Strong individual rights emerge naturally in gaming experiments

Many natural resources, such as grazing lands, forests, and fisheries, can be managed either by lots of people communally (common property), by top-down regulation, or by individual rights. A new analysis shows experimentally that individual rights emerge as the preferred choice when people are given freedom to choose among different clubs that each decide how to manage part of the resource. The experiments mimicked the setup in the Northeast US Multispecies Groundfish Fishery, where there was strong opposition to allocating individual transferable quotas (ITQs) to each participant—which would have allowed each participant to catch a portion of the total catch, and lease or sell that right to others. Instead, sectors (“clubs”) were set up that each controlled a portion of the total catch, and users in each sector could decide how to fish the resulting quota. Lab experiments examined how individual users responded to this kind of setup, finding that individuals tended to move to clubs that allocated individual rights over time, because they were more profitable. However, just like in the real-life fishery, a few users continued to favor systems where fishers competed against each other rather than owning and fishing their portion of the quota. These fishers preferred the competitive nature of fishing derbies over the profitability and security of individual rights. The results suggest that it is not necessary to impose individual rights on all members harvesting a natural resource. Instead, self-identifying clubs of users can be granted considerable autonomy in how they manage a portion of the total allowable extraction, and individual rights will likely emerge naturally if they are the most profitable system. The new work by Mihoko Wakamatsu of Kyushu University, and SAFS professor Christopher Anderson, appears in the journal Ecological Economics.

In the lab experiments, profits from clubs using individual fishing rights (IQ) are consistently higher than profits from common pool competitive fishing (CP).
Over the course of the experiment, more and more participants switched from clubs with competitive fishing to clubs allocating individual fishing rights (IQs).
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