Uncertainty and Open Access: Implications from the Repeated Prisoners' Dilemma Game

"Open access" refers to situations in which individuals are not excluded from using a scarce resource. Where natural resources are concerned, open access is usually believed to promote depletion as individuals rush to obtain as much as they can before other claims are made. This phenomenon has been blamed for many important natural resource problems, including overexploitation of fisheries (Johnson and Libecap), decimation of tropical forests by wood gatherers (Eckholm), and excessive grazing on rangeland (Libecap and Johnson). In such cases, the exercise of selfinterest runs counter to the collective interest of all resource users and, if pursued generally, is self-defeating. Solutions to such problems must begin with restraints on the actions of interested parties. But what will lead fishers or woodgatherers or shepherds to develop such restraints? Are the incentives for voluntary restraints sufficiently strong, or must the restraints be imposed by authoritarian rules that can override individual interests? I am interested here in whether uncertainty encourages or discourages voluntary restraint in the use of open access resources. Two types of uncertainty may influence the emergence of voluntary restraints.' First, there is behavioral, or strategic, uncertainty. Individuals who are interdependent, as in open access situations, may be presumed to act based on their expectations of others' actions. If those actions cannot be perfectly predicted and assured, each participant must plan according to some probability distribution over the actions available to others. It has been argued that uncertainty may facilitate voluntary agreements among parties for whom noncooperative behavior is clearly rational and whose interactions are repeated (Axelrod and Kreps et al.). This argument, and its implications for open access resource problems, are examined critically in the next section of this paper. The second type of uncertainty stems from ature and markets. For example, forage or ish stocks may fluctuate from season to season from natural causes. Prices of livestock or fish may vary because of economic forces. These exogenous sources of variability create uncertainty of outcomes, apart from behaviors of others. The importance of this kind of uncertainty is considered in the third section of this paper. To assess the consequences of these sources of uncertainty, I refer to the repeated prisoners' dilemma game (e.g., Axelrod, Kreps et al., and Taylor). In this framework, pursuit of self-interest is always dominant economically in the short term, although it results in suboptimal collective returns. The stark conflict between individual and collective interests appears to reflect conditions with open access. However three major limitations of the model should be noted at the outset. First, it allows only for binary choices and a fixed number of players. Many open access problems involve continuous choices and an unrestricted number of players. Second, the game does not permit forward contracting or side payments between individuals. This precludes many devices used in reality to facilitate voluntary transactions. Third, the game remains the same period after period; no intertemporal externalities are reflected. These John B. Braden is an associate professor, Department of Agricultural Economics, University of Illinois. This research has been supported by grants from the Illinois Agricultural Experiment Station (No. 1-6-53491) and the Illinois Water Resources Center (No. -1-11381). ' "Uncertainty'"is used here interchangeably with "risk." Both refer to variability of outcomes due to forces beyond an individual's control.