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Groundwater Usage and Strategic Complements: Part I (Instrumental Variables)

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  • Caleb M. Koch

    (Computational Social Science, Department of Humanities, Social and Political Sciences, ETH Zürich, 8050 Zürich, Switzerland)

  • Heinrich H. Nax

    (Behavioral Game Theory, Department of Humanities, Social and Political Sciences, ETH Zürich, 8050 Zürich, Switzerland
    Institute of Sociology, University of Zürich, 8050 Zürich, Switzerland)

Abstract

We test whether the decisions in a common-pool resource game are better modeled game-theoretically as strategic substitutes or complements using an individual-level dataset of groundwater usage that accounts for 3% of US irrigated agriculture. Based on a regression framework with instrumental variables, we find support for strategic complements, suggesting that reciprocity– and/or race-to-depletion–like dynamics are key to understanding groundwater usage.

Suggested Citation

  • Caleb M. Koch & Heinrich H. Nax, 2022. "Groundwater Usage and Strategic Complements: Part I (Instrumental Variables)," Games, MDPI, vol. 13(5), pages 1-19, October.
    • Handle: RePEc:gam:jgames:v:13:y:2022:i:5:p:67-:d:943462
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    1. Caleb M. Koch & Heinrich H. Nax, 2022. "Groundwater Usage and Strategic Complements: Part II (Revealed Preferences)," Games, MDPI, vol. 13(5), pages 1-19, October.

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