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Three Essays on Defending Common-Pool Resources

% !TEX root = ../degeest2017dissertation.tex Environmental protection often relies on cooperation between individuals in uncoordinated groups. In cases such as the management of common-pool resources, individuals must not only monitor and enforce behavior within their group to prevent over-exploitation. They must also contend with external threats on the resource like poaching. This dissertation studies how individuals cooperate to manage shared resources and deter shared threats. The first chapter, "Deterring poaching of a common-pool resource", considers the problem of deterring a threat that cannot be perfectly observed. I present results from common pool resource experiments designed to examine the ability of a group of resource users, called insiders, to simultaneously manage their own exploitation and defend their resource from encroachment by outsiders. The insiders can use communication, peer monitoring and sanctions to coordinate their decisions. In addition, they can sanction any outsiders they observe. I vary the insiders' ability to observe and sanction the outsiders from no observability to partial and full observability. I find a striking non-monotonicity between observability of the outsiders and levels of poaching. Poaching was higher under partial monitoring than zero monitoring, and was lower and more stable under full monitoring. Although full observability allowed the insiders to better coordinate their own harvests, they were unable to fully deter poaching because their sanctions were far too low and they were unwilling to punish low levels of poaching. The second chapter, "Defending public goods and common-pool resources", studies cooperation and deterrence of a shared threat in different strategic environments. In many real-world social dilemmas, groups of individuals must cooperate to create surplus and defend it from theft. Theft can either foster or discourage collective action. On the one hand, a shared threat can align individual incentives. On the other hand, surplus creation may decrease if individuals are unsure how group members will contribute towards defense. Moreover, there is literature that suggests cooperation is sensitive to whether individual actions confer positive externalities (public goods, PG) or negative externalities (common-pool resources, CPR) on group members -- the "cooperation divergence". To examine the relationship between cooperation and defense in different externality settings, I conduct an experiment in which a group of insiders providing a public good or conserving a common-pool resource must coordinate to deter outsiders from stealing the value of their surplus. Our theory predicts that theft will have no different effect on behavior across externality settings. However, I find that it does. Surplus creation is significantly higher in the CPR treatment, while surplus defense is significantly higher in the PG treatment. Across both treatments, I find that the shared threat increases variation within groups, but the effect is more dramatic in the PG treatment. Finally, the third chaper, "Enforcement networks in social dilemmas", studies how enforcement emerges and evolves in the first chapter. Sanctions can increase cooperation in social dilemmas, but they impose a high social cost until a credible threat to non-cooperative behavior is established. Moreover, credible threats depend on enforcement structure. For example, small sanctions implemented by many subjects may have a different impact on behavior than the same volume of sanctions meted out by a single subject. In order to understand how credible threats to deviant behavior emerge, it is therefore necessary to study how enforcement structure emerges and evolves in groups. I study enforcement structure by taking a network approach to data from a social dilemma experiment with peer punishment. The exchange of sanctions between subjects can be framed as a directed, weighted network that evolves, enabling us to use tools from network structure to summarize, predict and simulate behavior. I first visualize and summarize the structure of these networks and show that enforcement structure is non-random and tends to cluster around a few individuals. I then model network formation and network efficiency using an empirical framework that separately considers edge formation (a binary sanctioning event) from edge weight (sanction size) and find that subjects respond more to the act of being sanctioned rather than the volume of sanctions. Finally, I recover the underlying Markov process governing enforcement structure and simulate expected long-run behavior. I conclude with a discussion of how my approach can be used to study generalized exchange networks.