Testing an Economic Approach to Resource Dilemmas

Abstract

This article applies a market mechanism derived from principles of welfare economics to a social dilemma simulation in the laboratory. In Study 1, half of the five-person groups were offered the opportunity to voluntarily "buy-out" one or more group members in an effort to conserve a shared, scarce resource. Most groups offered the intervention achieved at least one member buy-out per game. Yet, despite the smaller size of the groups, these groups did not sustain the resource pool any longer than control groups that were left intact. In fact, the results were in the opposite direction. Subjects behaved in a more self-interested manner. In Study 2, the "buy-out" intervention was varied to test the robustness of Study 1′s result. It was found that the intervention was not sensitive to changes in the specifics of operationalization. Discussion is offered regarding the complexity of market-based interventions in social choice situations and the need for improved understanding of the micro-mediating links between market dynamics and individual- and group-level behavior.