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Measures of risk associated to regulations compliance: a laboratory experiment on the use of common-pool resources

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  • Daniel Alfredo Revollo-Fernandez
  • Alonso Aguilar-Ibarra

Abstract

Analyzing the behavior of users of natural resources towards risk is of paramount importance to sustainability. This paper analyzes the degree of risk-aversion under an experimental setting, to different fishing control measures applied by an authority. In order to have a quantitative assessment of such attitudes, we applied four measures of risk-aversion, two are standard measures: the constant relative risk-aversion utility function, and the Arrow-Pratt absolute risk-aversion measure. Furthermore, we propose two new measures: risk-elasticity of extractions and a non-compliance risk index. The risk-aversion measured in this paper demonstrates that the sample studied with groups of students are, in general, risk-averse or slightly risk-loving (rather neutral) towards enforcement. The results show that, although a general tendency of lower extractions took place in comparison to a no-enforcement (i.e. open-access) treatment, a high level of enforcement (60% probability) led to higher extractions than at 20% and 40% enforcement level. There were also gender differences: women were more risk-averse than men. We conclude that there was a Motivation Crowding Effect present in players' behavior, and that gender differences are worth studying in further research on risk attitudes and management of common-pool resources.

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  • Daniel Alfredo Revollo-Fernandez & Alonso Aguilar-Ibarra, 2014. "Measures of risk associated to regulations compliance: a laboratory experiment on the use of common-pool resources," Journal of Risk Research, Taylor & Francis Journals, vol. 17(7), pages 903-921, August.
    • Handle: RePEc:taf:jriskr:v:17:y:2014:i:7:p:903-921
    DOI: 10.1080/13669877.2013.822914
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