Preferences for Government Enforcement of a Common Pool Harvest Quota: Theory and Experimental Evidence from Fishing Communities in Colombia

Transcription

1 January 2012 Prfrncs for Govrnmnt Enforcmnt of a Common Pool Harvst Quota: Thory and Exprimntal Evidnc from Fishing Communitis in Colombia MARIA ALEJANDRA VELEZ * School of Managmnt Univrsidad d los Ands Bogotá, Colombia JOHN K. STRANLUND Dpartmnt of Rsourc Economics Univrsity of Massachustts-Amhrst JAMES J. MURPHY Dpartmnt of Economics, Univrsity of Alaska Anchorag. * Corrspondnc to Maria Aljandra Vlz., School of Managmnt, Univrsidad d los Ands, Call 21 # 1-20 SD935, Bogotá, Colombia. mav@adm.uniands.du.co. 1

2 Prfrncs for Govrnmnt Enforcmnt of a Common Pool Harvst Quota: Thory and Exprimntal Evidnc from Fishing Communitis in Colombia Abstract: W xamin individual harvstrs prfrncs for govrnmnt nforcmnt of a quota imposd on th xploitation of a common pool rsourc. W dvlop a modl of Nash bhavior by idntical risk nutral harvstrs to xplain individual quilibrium prfrncs for nforcmnt of an fficint harvst quota. If th quota is not nforcd wll, w dmonstrat that individual harvstrs will always prfr incrasd nforcmnt ithr incrasd monitoring or incrasd pnaltis of th quota. W conduct a tst of this thortical rsult with data from framd common pool rsourc xprimnts conductd in artisanal fishing communitis in thr rgions of Colombia. Subjcts wr givn th opportunity to xprss thir prfrncs for nforcmnt by voting on two lvls of nforcmnt of a harvst quota, with and without communication. Th two nforcmnt stratgis involvd th sam probability that th govrnmnt would audit individual harvstrs, but diffrd in th lvl of th pnalty for noncomplianc. Contrary to thory, individuals votd for th lowr infficint pnalty about 80% of th tim and groups implmntd this wakr nforcmnt stratgy ovr 90% of th tim. Giving subjcts th opportunity to vot on th nforcmnt stratgy did not lad to mor fficint harvsts, nor did allowing subjcts to communicat bfor voting. JEL Classifications: C93, Q20, Q28 Kywords: common pool rsourcs, fild xprimnts, nforcmnt, rgulation, voting 1. Introduction Th standard xtrnality rsulting from th xploitation of common pool fishris (and othr common pool rsourcs) is that individual harvsts incras th costs of othr harvstrs. Consquntly, noncooprativ and unrgulatd xploitation of a fishry is gnrally infficint.. In many cass, thrfor, govrnmnt rgulation of common pool rsourcs is justifid. Of cours, all rgulations must b nforcd. Thus, th fficint dsign of a common pool rgulation must includ fficint nforcmnt stratgis to countract harvstrs incntivs to violat a rgulation and to account for th costs of nforcmnt. Howvr, many fishris rgulations ar poorly nforcd (Dolsak and Ostrom 2003), spcially in th dvloping world. Potntial rasons includ th unwillingnss of authoritis to allocat adquat rsourcs to nforcmnt and th lack of institutional capacity. 2

3 In this papr w analyz, both thortically and with xprimntal vidnc, on aspct of wak nforcmnt of common pool fishris: namly, do individual harvstrs prfr strictr nforcmnt of fishry rgulations? This is an important issu bcaus individual harvstrs may hav opportunitis to influnc and participat in th dsign and implmntation of rgulations, and hnc, to xprss thir prfrncs for wakr or strongr nforcmnt. Strongr nforcmnt of a rgulation involvs a fundamntal tradoff for th individual harvstr strongr nforcmnt incrass th xpctd costs of noncomplianc for an individual, but ncourags lowr aggrgat harvsts so that th cost xtrnality associatd with harvsting from a common pool is rducd. Which ffct dominats will dtrmin whthr individual harvstrs prfr strongr or wakr nforcmnt. Our motivation for studying this aspct of wak nforcmnt of fishris rgulations coms from our intrst in th fficacy of govrnmnt rgulations of artisanal fishris in th dvloping world. Enforcmnt of such rgulations is typically quit wak. Thus, our primary intrst is whthr small-scal harvstrs in a rgulatd fishry prfr that th govrnmnt xrt mor nforcmnt prssur on ths fishris or if wak nforcmnt is consistnt with thir dsirs. W bgin by dvloping a thortical modl of idntical risk nutral harvstrs of a common pool rsourc to xplain individual prfrncs for nforcmnt of an fficint harvst quota. W driv an optimal harvst rgulation that consists of a harvst quota and a costly monitoring stratgy to nforc th quota, givn a fixd unit pnalty for noncomplianc. W thn suppos that th quota is imprfctly nforcd in th sns that monitoring is not sufficint to induc full complianc with th quota, and dtrmin whthr individual harvstrs prfr incrasd nforcmnt. W dmonstrat that individual harvstrs will always prfr incrasd 3

4 nforcmnt ithr incrasd monitoring or incrasd pnaltis of th quota. Th rason is that strictr nforcmnt lads to lowr aggrgat harvsts, which bnfit an individual harvstr mor than th incras in th xpctd costs of noncomplianc. W tst this thortical rsult with data from framd common pool rsourc xprimnts conductd in thr gographically-distinct artisanal fishing communitis in Colombia with subjcts whos livlihoods dpnd upon succssful managmnt of a shard rsourc. Subjcts in som sssions wr givn th opportunity to xprss thir prfrncs for nforcmnt by voting on two lvls of th marginal pnalty for violating a harvst quota, on low and th othr significantly highr. Th harvst quota and th probability that th govrnmnt would audit individual harvstrs wr constant for all th tratmnts. Our thortical modl prdicts that th subjcts would always vot for th highr pnalty, mak mor consrvativ harvst choics, and b bttr off than if th rgulation wr nforcd with th lowr pnalty. Contrary to this prdiction, subjcts and groups wr rarly willing to implmnt th mor fficint pnalty. In th absnc of communication, individuals votd for th highr pnalty only about 20% of th tim, and as a rsult, groups implmntd this strictr nforcmnt stratgy through majority rul lss than 10% of th tim. This finding is robust across th thr rgions. Morovr, giving subjcts this opportunity to participat in part of th dsign of a rgulation by voting on th quota violation pnalty did not improv th fficincy of harvst choics. 1 Th xprimntal litratur on participation in th dsign of policis to promot mor fficint choics in social dilmmas is mixd. Whil som rsarchrs hav found that voting on 1 In many common pool fild xprimnts lik ours, subjcts tnd to b mor consrvativ than prdictd by modls of purly slf-intrstd harvstrs (.g., Cardnas t al. 2000; Vlz t al. 2009). W find this rsult in our study as wll. 4

5 crtain lmnts of policis can incras coopration in ths sttings, 2 this is rarly th cas for subjct participation in th dsign of nforcmnt. In a common pool rsourc xprimnt, Vyrastkova and van Sost (2003) askd subjcts to vot on whthr to allow an nforcr (an xprimnt participant) to kp th fins whn taking violators to court. An affirmativ vot was th fficint choic; howvr, thy found that harvstrs infrquntly votd to allow th nforcr to kp ths pnaltis, lading to infficint outcoms. Bischoff (2007) also found that allowing subjcts to vot on ruls did not lad to improvd outcoms. Bischoff s main conclusion is that although subjcts oftn votd for fficint quotas, thy wr rluctant to support incrasd monitoring intnsity. Consquntly, groups that could chang infficint rgulations through majority rul voting actually prformd wors than groups who wr not givn this opportunity. In a public goods xprimnt, Tyran and Fld (2006) compar th ffcts of an xognously-imposd rgulation that rquird ach prson to contribut all of hr ndowmnt to th public good vis-à-vis allowing subjcts to vot on th implmntation of this rgulation. In both scnarios, th rgulation was backd by prfct monitoring and a pnalty for all violations of this rquirmnt. Thir main conclusion is that complianc is significantly gratr whn th subjcts votd to implmnt a rgulation with a sanction that was too low to induc full complianc. Our xprimnts, as wll as thos of Vyrastkova and van Sost (2003) and Bischoff (2007), ar fundamntally diffrnt from Tyran and Fld s bcaus thir subjcts votd on whthr to impos a rgulation. In our work, subjcts votd on th svrity of sanctions, givn that a rgulation would b imposd. Thus, Tyran and Fld do not addrss th qustion of individual dsirs for incrasd nforcmnt that is th goal of our study. Morovr, th pnalty 2 For xampl, both Walkr t al. (2000) and Margritr t al. (2005) find that voting on th allocation ruls for a common pool rsourc substantially incrasd fficincy rlativ to a baslin with no opportunity for collctiv choic. Similarly, voting on th possibility of rwarding or punishing othr group mmbrs tnds to incras coopration (Ostrom t al., 1992; Suttr t al., 2010). 5

6 in Tyran and Fld s work is imposd with crtainty in cass of noncomplianc, whras our pnaltis ar imposd randomly bcaus monitoring to dtct noncomplianc is imprfct. 3 Ths authors took a similar approach in a sparat xprimntal study of tax complianc and found similar rsults; spcifically thy found that complianc was highr whn subjcts votd to accpt a crtain fin for noncomplianc than whn th fin was xognously imposd (Fld and Tyran 2002). Th study that is closst to ours is by Alm t al. (1999) who studid voting on th nforcmnt paramtrs of an incom tax policy (tax rat, audit rat and fin). Thy also found that subjcts wr unwilling to vot for strictr nforcmnt. Whn subjcts could not communicat, thy always votd against strictr nforcmnt, both incrass in audit probabilitis and incrass in th fin for vadd taxs, vn in tratmnts in which it was fficint to do so. Th subjcts somtims votd for incrasd nforcmnt whn thy could communicat with on anothr. Morovr, whn th subjcts votd for wakr nforcmnt, complianc rats dcrasd significantly. Alm t al. (1999) suggst that voting against strongr nforcmnt snds a signal of social accptability of tax vasion. In summary, whil othr rsarchrs hav found that subjct participation in th dcision about whthr to nforc an xtrnal rgulation may lad to mor fficint choics (Tyran and Fld 2006), it is clar that participation in th dcision about th lvl of nforcmnt dos not (Alm t al. 1999). W com to th sam conclusion, but our work is th first to xamin this issu in a fild stting. Th subjcts in our xprimnts ar mainly fishrmn who oprat undr poorly nforcd rgulations or ar intimatly connctd to a local fishry in othr ways. Thus, 3 Cardnas (2005) xprimnts ar similar to Tyran and Fld s (2006), although h focusd on a common pool rsourc nvironmnt and his main objctiv was to xamin possibl diffrncs in th dcisions mad by univrsity studnts in Bogotá, Colombia and fild subjcts in rural aras of Colombia. H finds that, in th majority of th cass, participants in rural aras opposd xtrnal rgulation but studnts in urban aras normally votd in favor of rgulation. 6

7 th ovrxploitation of common pool rsourcs and th (in)ffctivnss of govrnmnt rgulations dsignd to promot fficint harvsts ar critically important to th subjcts in our xprimnts. Morovr, w xploit th htrognity of th fild by conducting our xprimnts in thr rgions of Colombia in communitis that ar dpndnt on a local fishry, but that vary in othr ways. In ach ara w find th sam gnral rsult: subjcts ar unwilling to vot for strictr rgulatory nforcmnt, vn whn it would b in thir bst intrsts (both individually and collctivly) to do so. Thus, w dmonstrat that rsults obtaind in laboratory xprimnts about th infficincy of allowing subjcts to vot on nforcmnt xtnd to artisanal fishing communitis in Colombia. 2. Individual prfrncs for nforcing a common pool harvst quota Our xprimntal dsign is basd on a modl of bhavior by risk nutral harvstrs who fac a harvst quota that thy may violat. Th modl is a static on that is similar to th modl dvlopd by Corns and Sandlr (1983), and usd in xprimntal work by Ostrom t al. (1994), among othrs. A fixd group of n idntical risk nutral individuals harvst a common pool rsourc. Individual i harvsts x i units up to a capacity constraint. max x i Units of harvst sll at a constant pric p. Th individual s harvst costs ar n n i= 1 i i i= 1 i whr c and d c x + dx x, ar positiv constants. By dfining x = x, w can writ i s harvst costs mor compactly i j i as c( x + x ) + dx ( x + x ). Ths componnts of th cost function captur th social i i i i i dilmma of th modl: dx ( x + ) capturs th cost xtrnality that is typical of common pool i i x i problms, whil cx ( + ) capturs ngativ xtrnalitis that rduc individual xistnc or i x i non-us valus. Th individual has an ndowmnt i. j 7

8 Imagin that a harvst quota has bn imposd in th common pool rsourc. Suppos furthr that this quota has bn st at th lvl of individual harvsts that maximizs th joint payoffs of th harvstrs lss th aggrgat costs of nforcing th quota. Dnot th harvst quota as x, and not that it must b a uniform quota bcaus th harvstrs ar idntical. To nforc this quota th authoritis monitor th harvstrs and impos a pnalty whn on is found to hav takn mor from th common pool than th quota allows. Lt th probability that a violation by an individual harvstr is dtctd b π and lt this probability b th sam for ach harvstr. Th unit pnalty for a violation is φ so that an individual with violation x x 0 facs a pnalty φ( x x ) 0 if th violation is discovrd. Th unit pnalty is high nough to i allow th rgulation to involv complt complianc if this turns out to b optimal. Each individual harvstr chooss a harvst lvl to maximiz his xpctd payoff, w = + px c( x + x ) dx ( x + x ) πφ( x x ), [1] i i i i i i i i i i subjct to xi x to rflct th fact that an individual nvr has th incntiv to b ovrcompliant. It is straightforward to show that th uniqu symmtric Nash quilibrium harvsts ar 4 n p c πφ x ( πφ, ) =. dn ( + 1) [2] Assum throughout that p c πφ > 0 so that Nash harvsts ar always strictly positiv. Using [1], individual quilibrium payoffs ar 2 w( πφ,, x ) = + px n ( πφ, ) ncx n ( πφ, ) dn( x n ( πφ, )) πφ( x n ( πφ, ) x ). [3] 4 All drivations of th rsults in this sction ar availabl from th authors upon rqust. 8

9 Now lt us dtrmin th optimal harvst rgulation. Th optimal harvst quota optimal dtction probability x and π maximiz th nt valu of harvsts from th common minus th costs of monitoring, taking into account how th nforcmnt variabls dtrmin quilibrium harvsts. Lt th cost of stablishing th optimal dtction probability for ach firm b mπ. If optimality calls for noncomplianc to th quota, pnaltis ar tratd as mr transfrs so that th govrnmnt ignors thm. Thrfor, th rgulatory objctiv is to choos maximiz 2 { } x and π to W ( π, x ) = n + px n ( π, φ) ncx n ( π, φ) dn( x n ( π, φ)) mπ, [4] n subjct to π [0,1] and x x ( π, φ) to again rflct th fact that harvstrs will nvr find it optimal to ovr-comply. Not that th harvst quota dos not ntr th authority s objctiv function [4]. This implis that thr is no loss or gain to stting th quota so that th harvstrs ar fully compliant; n that is, x = x ( π, φ). 5 Onc this constraint is imposd on th authority s problm, it is straightforward to show that th optimal dtction probability is 2 ( p + nc)( n 1) φ md( n + 1) π = [5] 2 2nφ as long as th right sid of [5] is an lmnt of [0,1]. If th right sid is ngativ, thn π = 0, which indicats that it is not worth rgulating th common. This may occur if th marginal cost of monitoring m is sufficintly high. On th othr hand if th right sid of [5] is gratr than on, 5 Part of th indiffrnc th authority has toward complianc vs. noncomplianc has to do with our assumption that pnaltis hav no ral ffcts. Howvr, authoritis typically hav to xpnd rsourcs to impos and collct pnaltis from violators. Incorporating th assumption that collcting pnaltis is costly in our modl would yild th rsult that it is unambiguously optimal to nforc full complianc to th quota. 9

10 thn π = 1, indicating prfct monitoring. W ignor ths possibl boundary solutions. Thn, n substituting [5] into x = x ( π, φ) yilds th optimal harvst quota: ( ) ( 1) (, ) p nc φ + md n + x = x n π φ =. [6] 2dnφ Not that stting th marginal cost of monitoring m qual to zro yilds th first-bst harvst quota. Positiv marginal monitoring costs imply that th scond-bst quota [6] is highr than th first-bst quota. For many rgulations, howvr, nforcmnt stratgis ar not dsignd to induc prfct complianc to a standard. Imprfct complianc in our thortical modl rsults if π < π. In fact th qustion w ar most intrstd in this papr is whthr individuals prfr incrasd nforcmnt whn an fficint quota is imprfctly nforcd. To answr this qustion rturn to an individual s payoff in a symmtric Nash quilibrium givn by [3]. Into [3] substitut [6] for n x and [2] for x (, ) paramtrs, π and πφ to obtain an individual s payoff as a function solly of th nforcmnt φ. Thn it is straightforward to calculat: 3 2 (, ) ( 1) [( )( 1) 4 ] w π φ dm n + + φ p + nc n + nπφ = > 0 ; [7] 2 π 2 dn( n + 1) 2 w( π, φ) π[( p + nc)( n 1) + 4 nπφ] = > 0. [8] 2 φ 2 dn( n + 1) Sinc both of ths drivativs ar strictly positiv, ach individual harvstr is bttr off with strictr nforcmnt of th fficint harvst quota. 6 It is th natur of th social dilmma that all common pool usrs ar bttr off if thy rstrict thir harvsts, but individually thy hav littl incntiv to do so. A rgulation can align 6 In fact, it can b shown that harvstrs will prfr incrasd nforcmnt vn whn thy hav to pay for it. A proof of this assrtion is also availabl from th authors. 10

11 individual and group incntivs, but it must b nforcd wll to b fficint. Howvr, vn a poorly nforcd rgulation that is widly violatd can improv th wlfar of harvstrs if it motivats thm to rstrict thir tak from th common pool. Th rgulation will not b fficint, but it could b an improvmnt. Now, an individual harvstr that violats a quota would nvr prfr mor stringnt monitoring or highr sanctions dirctd solly at him. Howvr, our rsults rval that th harvstr and all othrs prfr strictr nforcmnt if it is imposd on th ntir group. Th rason is simpl: nhancd nforcmnt pushs aggrgat harvsts toward th fficint lvl, which producs a gain for ach harvstr that is gratr than th incras in thir individual xpctd sanctions for noncomplianc. 2. Exprimntal Dsign W tst th thortical rsult that harvstrs prfr strictr nforcmnt with data from framd common pool rsourc xprimnts conductd in thr rgions of Colombia. W framd th xprimnts an individual harvsting dcision from a local fishry. 7 To xamin th robustnss of our rsults, all xprimntal tratmnts wr conductd in ach of th thr rgions. Ths aras ar similar in that ach dpnds havily on local fishris in fact, most of th participants in our xprimnts wr fishrmn but thy diffr in many othr ways. W do not pos hypothss about how bhavior may diffr across rgions, mainly bcaus it is not possibl to conduct rigorous tsts with only thr rgions. Howvr, a brif dscription of how th rgions ar diffrnt is appropriat. Summary statistics of th subjcts charactristics ar providd in Tabl 1. 7 Using th Harrison and List (2004) taxonomy, ths ar framd fild xprimnts bcaus thy ar conductd with a population of subjcts for which th phnomnon of intrst to us (bhavior in a common pool fishry) is also an important lmnt of th subjcts xprincs. 11

12 Subjcts living nar th Ensnada d Tumaco in th Pacific rgion ar mmbrs of Afro- Colombian communitis who, for th most part, liv in collctiv trritoris. Th participants in th Magdalna rgion ar from th towns of La Dorada, Caldas, and surrounding villags, and ar part of a mostly whit and mstizo population that harvsts fish from th Magdalna Rivr and th adjacnt lak, Charca d Guarinocito. In trms of basic charactristics, th participants hr wr similar to thos in th Pacific rgion. Th final st of xprimnts was conductd nar th city of Santa Marta in th Caribban rgion. Subjcts thr ar part of a multithnic population of whits, mstizos, African dscndants, and indignous popl. Th participants in this rgion ar somwhat diffrnt than in th othr two rgions. Th proportion of participants in this rgion who rportd that fishing is thir main conomic activity is significantly lowr than in th othr two rgions, as is th prcnt who rport living in th ara for mor than 10 yars. Som of th othr participants wr small-scal fish buyrs who thn rsold thir product in Santa Marta. Th rst wr farmworkrs. Subjcts wr also youngr and mor ducatd, with significantly fwr mal subjcts. S Vlz t al. (2010) for a mor thorough dscription of th communitis. Subjcts wr placd in groups of fiv and participatd in a hand-run, 20-priod common pool rsourc xprimnt that was framd as a harvst dcision from a fishry. 8 Each subjct rcivd an idntical payoff tabl that was gnratd from a simpl modification of [1], xcluding th xpctd marginal pnalty for violations, πφ. Th concpt of zro harvst is difficult to xplain in th fild bcaus th participants dpnd so critically on thir us of local natural rsourcs. Thrfor, individual harvst choics wr shiftd by on to rang from on to nin, rathr than zro to ight. Accordingly, w modifid [1] by dfining xˆ = x 1 and cratd i i 8 Assignmnt to groups was not compltly random. W trid to nsur that rlativs wr in sparat groups. 12

13 th individual payoff tabl from = + pxˆ c( xˆ + xˆ ) dxˆ ( xˆ + xˆ ), with paramtrs p = π i i i i i i i i , c = , d = 2.75, and i = In th xprimnts, individual harvsts wr constraind to intgr valus btwn on and nin units. In an unrgulatd nvironmnt th standard symmtric Nash quilibrium is achivd whn ach individual chooss to harvst svn units, whil th individual harvst that maximizs group wlfar is two units. In vry sssion, th first stag consistd of 10 rounds in an unrgulatd common pool rsourc nvironmnt without communication. Th 10-round scond stag distinguishd th six tratmnts with th 3 2 factorial dsign summarizd in Tabl 2. A total of 360 individuals participatd in th xprimnts, dividd into 72 fiv-prson groups (3 rgions 6 tratmnts 4 groups pr tratmnt). W considr two xognously imposd nforcmnt stratgis (Imposd Low and Imposd Mdium) which consist of an individual harvst quota st at th lvl that maximizs a group s payoff ( x = 2), but that diffr with rspct to th lvl of nforcmnt. 10 Both nforcmnt stratgis hav th sam π = 10% probability that a subjct s harvst choic would b inspctd. 11 If an inspction rvald that a subjct s harvst was gratr than two, thn that prson incurrd a financial pnalty. For th Low pnalty, th fin was φ L = 27 psos pr unit abov th quota. With this pnalty, th rsulting marginal xpctd pnalty is not high nough to chang th pur Nash stratgy quilibrium from th unrgulatd quilibrium of svn units of harvst by ach individual. For th Mdium pnalty, th fin was φ M = 165 psos pr unit. Th 9 Exprimnt instructions ar availabl upon rqust. 10 W do not attmpt to dtrmin and implmnt th harvst quota that maximizs a group s payoff lss monitoring costs, givn by quation [8] in th prvious sction. To do so, w would hav had to spcify an ad hoc valu for marginal monitoring costs m. Our hypothsis that individuals will always prfr incrasd nforcmnt is unaffctd by this dsign choic. 11 Th rsults of inspctions wr not mad public. In ordr to dcid who in a group, if anyon, was inspctd in a particular round, a ballot was chosn from a bag containing 5 ballots with th participants numbrs on thm and 5 othr blank ballots. 13

14 Nash stratgy quilibrium with this pnalty is rducd to six units of harvst for ach individual. W chos nforcmnt stratgis that could not support full complianc to th harvst quota, at last undr a convntional thory of rgulatory nforcmnt, bcaus this is likly to b a charactristic of most rgulatory controls of rsourc us in th dvloping world. Each of th two voting tratmnts (Vot/Com and Vot/NoCom) allowd th subjcts to vot on th siz of th marginal pnalty (φ L = 27 psos or φ M = 165 psos), whil kping th sam harvst quota and monitoring probability. Majority rul dtrmind which pnalty would b implmntd. Th vot took plac at th start of ach round. Participants wr informd about th lvl of th pnalty chosn by th majority and th distribution of th vots bfor dciding on thir lvls of harvst. Th xpctd Nash quilibrium payoff of a risk nutral subjct undr th low pnalty is psos, whil it is 628 psos undr th mdium pnalty. Thus, as w hav dmonstratd thortically, subjcts ar xpctd to always vot for th mdium pnalty. Fac-to-fac vrbal communication was prmittd only in th thr communication tratmnts. Evry round, prior to making any dcisions, subjcts wr givn fiv minuts to discuss th xprimnt bfor rturning to thir sats and making thir dcisions in privat. Aftr all subjcts compltd thir dcisions, th xprimntr collctd this information and announcd to th group th aggrgat lvl of harvst for that round. With this information individuals wr abl to calculat both th total harvst of th othr four group mmbrs and thir own individual payoffs. Individual arnings in th xprimnts rangd btwn 11,220 and 14

15 22,900 psos with an avrag of 15,240 psos (about US$6.00). 12 Earnings wr paid in cash at th nd of ach xprimnt. Each xprimnt lastd about 3 hours Rsults 3.1. Voting choics Individual and group voting rsults for th two voting tratmnts ar prsntd in Tabls 3 and 4. Although our thortical dvlopmnt producs th hypothsis that subjcts would always vot for strictr nforcmnt of th two-unit harvst quota, th xprimnt rsults strongly suggst othrwis. Out of a total of 600 individual vots cast without communication (12 groups of 5 subjcts ovr 10 rounds), only 119 (20%) wr for th mdium pnalty. Consquntly, out of 120 opportunitis (12 groups ovr 10 rounds), groups votd to implmnt th mdium pnalty lss than 10% of th tim. That subjcts and groups votd against th mdium pnalty is consistnt across rgions. As shown in Tabl 3, in th absnc of communication, individuals in th Caribban votd for th mdium pnalty 7.5% of th tim, in th Magdalna rgion 20.5%, and in th Pacific rgion 31.5%. Tabl 4 shows that, as a rsult of ths individual vots, th mdium pnalty was nvr implmntd in th Caribban, in th Magdalna th mdium pnalty was implmntd in only 4 of 40 opportunitis, and in th Pacific only 5 of 40 opportunitis. Ovrall, communication did not chang individual voting dcisions by much and groups implmntd th mdium pnalty only 16% of th tim. Thrfor, our main finding is that subjcts and groups rarly votd to implmnt th mor fficint mdium pnalty and this is robust across rgions. Ths conclusions ar consistnt with th rsults of Bischoff (2007), 12 A day s wag in th rgions whr th xprimnts wr conductd varid btwn 10,000 and 15,000 psos at th tim of th xprimnts. 13 Bfor ach xprimnt bgan, instructions wr rad aloud by th monitor and svral practic rounds that did not count toward final arnings wr playd to familiariz th participants with th xprimnts. Th ral mony rounds bgan aftr all participants undrstood th ruls of th gam. 15

16 Vyrastkova and van Sost (2003), and Alm t al. (1999), who also found that subjcts wr rluctant to impos strictr nforcmnt on thir groups, vn whn it was fficint to do so Effct of rgulations on harvsting dcisions in stag 2 To xamin th ffcts of th rgulations in stag 2, w bgin with th avrag harvsts in Tabl 5. In th stag 1 no-rgulation baslin, individual harvsts avragd 5.6 in ach of th thr rgions. Similar to othr studis in this ara, ths avrag harvsts ar significantly blow th Nash quilibrium prdiction of svn units, but significantly abov th fficint individual harvst of two units (Vlz, t al and 2010). 14 Using a random ffcts Tobit modl not rportd in this papr, w confirm th rsults of Vlz, t al. (2010) that (a) thr is no statistically significant diffrnc in th stag 1 harvst across th rgions, and (b) for vry tratmnt-rgion combination, individual harvsts dcisions in stag 2 ar lowr than thos in th unrgulatd stag 1 Baslin. Thus, ach of th scond-stag institutions, rgardlss of whthr th nforcmnt paramtrs wr xognously imposd or collctivly agrd upon through a majority vot, was ffctiv at inducing mor consrvativ harvst choics vis-à-vis th first stag no nforcmnt baslin. This clarly suggsts that th prsnc of an imprfctly nforcd rgulation that rquirs socially fficint choics inducs mor consrvativ harvst choics, rgardlss of whthr subjcts ar abl to vot on th rgulation. Although subjcts rarly support th mor stringnt mdium pnalty, it is still possibl that th ability to participat in th dcision about th nforcmnt paramtrs could lad to mor fficint harvst choics, vn whn th group collctivly dcids not to implmnt th mdium pnalty. To dtrmin th ffcts on individual harvsts of voting vrsus xognously imposing 14 Cardnas (2004) usd a common pool dsign that is similar to ours and also found that participant s dcisions in th fild and in th lab tnd to li btwn thir pur Nash stratgis and th fficint harvst. 16

17 an nforcmnt stratgy w stimat th pair of random ffcts Tobit modls in Tabl 6 that control for th cnsord natur of th data (individual dcisions wr constraind to b btwn 1 and 9) and th individual rpatd obsrvations. To control for changs in individual dcisions ovr tim, th first modl in Tabl 6 includs only th data from th first fiv priods of stag 2, and th scond modl includs just th last fiv priods (stag 1 data ar not includd). Th dpndnt variabl is th individual harvst dcision; th xplanatory variabls includ dummy variabls for th tratmnt ffcts by rgion, priod ffcts (for stag two, th priods ar numbrd 11-20), and sociodmographic charactristics. Th modl xcluds th constant, so th cofficints for th tratmnt rgion dummy variabls rflct individual harvst dcisions aftr controlling for sociodmographic charactristics and tim. Bcaus of th small numbr of obsrvations, th data do not includ thos instancs in which groups votd to implmnt th mdium pnalty. Tabl 7 summarizs th Wald chi-squard tsts of hypothss rlatd to both rgional and tratmnt ffcts basd on th modls in Tabl 6. Rgional diffrncs: As rportd in Vlz t al. (2010), and confirmd in Tabl 7, thr ar significant rgional diffrncs in individual harvsts with th low pnalty rgardlss of whthr it was imposd or votd upon, or whthr subjcts wr abl to communicat with ach othr. Intrstingly, thr ar significant rgional diffrncs in harvsts with th imposd mdium pnalty in th first fiv priods of th scond stag, but ths diffrncs ar insignificant in th last fiv priods of th stag. Rcall that th low pnalty was chosn so that th xpctd pnalty was too low to chang prdictd bhavior rlativ to th stag 1 baslin. That th low pnalty inducd mor consrvativ harvst choics indicats that subjcts rspondd to th rgulatory fram, not th xpctd pnalty. Vlz, t al. (2010) suggst that institutions that rly on framing ffcts to induc chang ar mor likly to b snsitiv to 17

18 rgional diffrncs, whras thos that rly on strongr montary incntivs will yild mor consistnt dcisions. Sinc th subjcts in our study ovrwhlmingly votd for th imposition of th low pnalty, it is not surprising that w obsrv significant rgional diffrncs in individual harvst dcisions in th Vot tratmnts. Voting ffcts: Th litratur on voting for institutional dsigns argus that this mchanism can coordinat xpctations and lgitimiz rgulations via participation. Hnc th voting mchanism might incras complianc (dcras harvsts) compard to imposd rgulations. Howvr, whthr voting will hav an impact on individual harvst dcisions is unclar whn an infficint pnalty is chosn, as happnd most of th tim in our xprimnts. From Tabl 7, w gnrally do not obsrv significant diffrncs in harvsts btwn tratmnts in which subjcts votd to implmnt th low pnalty and whn this low pnalty was xognously imposd. Th main xcption is in th Caribban whn subjcts could communicat. Intrstingly, avrag harvsts wr significantly highr in this rgion whn subjcts votd to implmnt th low pnalty than whn this pnalty was imposd on thm. In th Magdalna rgion, individual harvsts wr significantly lowr whn th subjcts could communicat and thy votd to implmnt th low pnalty in th first fiv priods of th scond stag, but this significanc disappard in th scond fiv priods. W can also valuat whthr rgulatory participation through voting on nforcmnt lvls was mor ffctiv at rducing harvsts than th xognously imposd mdium pnalty, vn as subjcts usually votd to implmnt th low pnalty. Th rsults in Tabl 7 suggst that this is not th cas. For all thr rgions, thr is usually no diffrnc in harvst choics btwn th Imposd Mdium and Vot(Low) tratmnts; this rsult holds rgardlss of whthr subjcts could communicat. Whn thr ar significant diffrncs that is, in th Magdalna 18

19 rgion in th first fiv priods whn th subjcts could not communicat and in th last fiv priods whn thy could communicat individual harvsts ar lowr undr th imposd mdium pnalty than whn th subjcts votd to implmnt th low pnalty. Our ovrall conclusion, thn, is that voting on th lvl of nforcmnt dos not rduc individual harvsts vis-à-vis xognously imposd nforcmnt. Communication ffcts whn voting: Thr is a robust litratur which suggsts that communication in social dilmmas usually rsults in mor fficint dcisions (Shankar and Pavitt, 2002, Cardnas t al., 2003, Ostrom, 2010). Contrary to th litratur, th rsults in Tabl 7 indicat that allowing subjcts to communicat bfor voting did not rduc harvsts (rlativ to voting without prior communication). Th on xcption is in th Magdalna rgion; thr, communication was ffctiv at rducing harvsts during th first fiv priods of stag 2, but this ffct diminishd in th latr priods. During th xprimnts, w obsrvd that individuals spnt a grat dal of thir tim discussing how to vot, instad of trying to coordinat harvst rductions. It appars that th convntional rsult that communication lads to mor fficint choics did not occur in our xprimnts bcaus th voting dcision bcam th focal point of discussions which usually rsultd in vots to th implmnt th low pnalty. 4. Conclusion W hav xamind, both thortically and with framd fild xprimnts, individual harvstrs prfrncs for govrnmnt nforcmnt of a harvst quota imposd on th xploitation of a common pool rsourc. Our thortical rsults ar unquivocal. In a situation involving poor nforcmnt of an othrwis fficint harvst quota, individual harvstrs will always prfr strictr nforcmnt. Our xprimntal rsults ar qually unquivocal in thir contradiction of 19

20 th thortical rsult subjcts rarly votd to implmnt a highr pnalty for violating a harvst quota. Consquntly, allowing subjcts to vot on th dsign of rgulatory nforcmnt did not lad to mor fficint choics than simply imposing a wak nforcmnt stratgy. Othrs hav found similar rsults in laboratory xprimnts, but w dmonstrat that ths rsults also hold in th fild with actual common pool usrs who oprat undr poorly nforcd fishing rgulations. Thus, th rluctanc of individuals to vot for strongr nforcmnt of ruls that could mak thm bttr off ar not likly to b mr artifacts of univrsity labs. Howvr, rcall that othr studis of participation in policy dsign hav producd mor positiv rsults, so th strong ngativ raction to strictr nforcmnt is a puzzl that could us furthr invstigation. Could it b a gnral mistrust of th corciv powrs of govrnmnt? Is it du to individuals inability to discrn how incrasing th xpctd costs of thir actions could lad to mor fficint group bhavior? Ths and othr possibl xplanations for th rluctanc of individuals and groups to impos fficint nforcmnt on thir bhavior can b tstd with wll-dsignd xprimnts. Studis that hav found positiv ffcts of participation in rul dsign hav all bn laboratory xprimnts. W think it is important to conduct ths and rlatd xprimnts in fild sttings. W hav shown that subjct bhavior is similar in laboratory and fild sttings in trms of xprssing prfrncs for strictr nforcmnt, but w do not know if this similarity xtnds to othr dimnsions of policy. Th litratur, including our contribution, suggsts that individual participation is hlpful for som dimnsions of policy, and not at all hlpful for othr dimnsions. Thus, th valu of dirct dmocratic participation in policy dsign is ambiguous. Clarly, furthr rsarch is 20

21 ncssary to clarify th bnfits and costs of participation and to uncovr th most fficint form of participation in th dsign of policis to confront social dilmmas. 21

22 Rfrncs Alm, J., G.H. McCllland, and W.D. Schulz (1999). Changing th social norm of tax complianc by voting. Kyklos 52 (2), Bischoff, I. (2007). Institutional choic vrsus communication in social dilmmas an xprimntal approach. Journal of Economic Bhavior & Organization 62(1), Cardnas, J. C., J.K. Stranlund, and C. Willis (2000). "Local Environmntal Control and Institutional Crowding-Out." World Dvlopmnt. 28: Cardnas, J. C. (2005). "Groups, commons and rgulations: xprimnts with villagrs and studnts in Colombia. In Psychology, Rationality and Economic Bhavior: Challnging Standard Assumptions. Bina Agarwal and Alssandro Vrclli (Eds.). Palgrav Macmillan. Cardnas, J. C., T.K. Ahn and E. Ostrom. (2003). Communication and coopration in a common pool rsourc dilmma: a fild xprimnt. In Advancs in Undrstanding Stratgic Bhavior: Gam Thory, Exprimnts and Boundd Rationality: Essays in Honor of Wrnr Guth. Stffn Huck (Ed.), Palgrav, Nw York. Corns, R., and T. Sandlr (1983). On commons and tragdis. Amrican Economic Rviw 73(4), Dolsak, N., and E. Ostrom (2003). Th challngs of th commons. In Th Commons in th Nw Millnnium. N. Dolsak and E. Ostrom ditors. Cambridg: MIT Prss. Fld, L.P., and J. R. Tyran. (2002). Tax vasion and voting: an xprimntal analysis. Kyklos 55(2), Harrison, G. W. and J. List. Fild xprimnts. Journal of Economic Litratur 42(4), 2004, Margritr, M., M. Suttr, and D. Dittrich. (2005). Individual and collctiv choic and voting in common pool rsourc problm with htrognous actors. Environmntal and Rsourc Economics 32(2), Ostrom, E., J. Walkr and R. Gardnr (1994). Ruls, Gams, and Common-Pool Rsourcs. Univrsity of Michigan Prss, Ann Arbor Michigan. Ostrom, E. (2006). Th valu-addd of laboratory xprimnts for th study of institutions and common-pool rsourcs. Journal of Economic Bhavior and Organization 61(2), Ostrom, E. (2010). Byond markts and stats: polycntric govrnanc of complx conomic systms. Amrican Economic Rviw 100(3), Shankar, A. and C. Pavitt (2002). Rsourc and public goods dilmmas: a nw issu for communication rsarch. Rviw of Communication 2(3),

23 Suttr, M., S. Haignr and M. G. Kochr (2010). Choosing th carrot or th stick? Endognous institutional choic in social dilmma situations. Rviw of Economic Studis 77(4), Tyran, J. R, and L. P. Fld (2006). Achiving complianc whn lgal sanctions ar nondtrrnt. Scandinavian Journal of Economics 108(1), Vyrastkova, J. and D. van Sost (2003). "Cntralizd common-pool managmnt and local community participation. Land Economics 79(4), Vlz, M. A., J. K. Stranlund and J. J. Murphy (2009). What motivats common pool rsourc usrs? Exprimntal vidnc from th fild. Journal of Economic Bhavior and Organization 70(3), Vlz, M. A., J. J. Murphy, and J. K. Stranlund (2010). Cntralizd and dcntralizd managmnt of local common pool rsourcs in th dvloping world: xprimntal vidnc from fishing communitis in Colombia. Economic Inquiry 48(2), Walkr, J. M., R. Gardnr, A. Hrr and E. Ostrom (2000). Collctiv choic in th commons: xprimntal rsults on proposd allocation ruls and vots. Economic Journal 110(460),

24 Tabl 1: Summary statistics of subjct charactristics a Subjct Charactristics N Caribban N Magdalna N Pacific Man Ag (yars) Man yars of formal ducation Prcnt Fmal % % % Prcnt who hav livd in th sam community for at last 10 yars % % % Prcnt for whom fishing is a primary activity % % % a N rfrs to th numbr of rsponss. Thr wr 120 participants in ach of th thr rgions. 24

25 Tabl 2. Exprimntal Dsign (Stag 2 tratmnts) Enforcmnt Vrbal Communication Ys No Low Imposd Low/Com Imposd Low/NoCom Mdium Imposd Mdium/Com Imposd Mdium/NoCom Vot Vot(Low or Mdium)/Com a Vot(Low or Mdium)/NoCom a a Voting outcom displayd in parnthsis (Low or Mdium) 25

26 Tabl 3. Individual voting dcisions N Caribban Magdalna Pacific Low Pnalty Mdium Pnalty N Low Pnalty Mdium Pnalty N Low Pnalty No Communication With Communication In ach rgion, thr wr 4 groups 5 subjcts/group 10 rounds pr group for a total of N=200. Mdium Pnalty Tabl 4. Group-lvl voting outcoms N Caribban Magdalna Pacific Low Pnalty Mdium Pnalty N Low Pnalty Mdium Pnalty N Low Pnalty No Communication With Communication In ach rgion, thr wr 4 groups 10 rounds pr group for a total of N=40. Mdium Pnalty 26

27 Tabl 5. Man individual harvst dcisions No Communication With Communication Caribban N Harvst a N Harvst Stag 1 Baslin (2.45) Imposd Low (2.73) (2.28) Imposd Mdium (2.89) (2.81) Vot(Low) b (3.00) (1.95) Vot(Mdium) (0.75) Magdalna Stag 1 Baslin (2.51) Imposd Low (2.76) Imposd Mdium (2.66) Vot(Low) (2.76) Vot(Mdium) (1.64) (2.63) (2.36) (2.39) (1.79) Pacific Stag 1 Baslin (2.37) Imposd Low (2.11) Imposd Mdium (2.42) Vot(Low) (2.09) Vot(Mdium) (2.72) a Standard dviation in parnthss (1.96) (2.26) (2.38) (2.68) b Txt in parnthss following th Vot tratmnt labl rfrs to th outcom. 27

28 Tabl 6: Random ffcts Tobit stimation of individual harvst dcisions in stag 2 a Variabl First 5 Priods Last 5 Priods Ag (yars) -0.02** (0.01) -0.03*** (0.01) Education (yars of formal schooling) 0.11*** (0.04) 0.13*** (0.05) Fmal (0.31) 0.29 (0.36) Livd in rgion for at last 10 yars 0.23 (0.39) (0.45) Fishrman 0.75** (0.34) 1.23*** (0.39) Priod 0.08** (0.04) 0.09** (0.04) Caribban Rgion (Car) Car Imposd Low / NoCom 3.19*** (0.95) 2.86** (1.19) Car Imposd Low / Com 1.25 (0.95) (1.19) Car Imposd Md / NoCom 3.12*** (0.94) 2.71** (1.17) Car Imposd Md / Com 3.56*** (0.97) 2.10* (1.20) Car Vot(Low) / NoCom 2.98*** (0.99) 2.76** (1.23) Car Vot(Low) / Com 2.98*** (0.93) 2.17* (1.16) Magdalna Rgion (Mag) Mag Imposd Low / NoCom 2.88*** (0.96) 3.01** (1.20) Mag Imposd Low / Com 2.76*** (0.96) 3.30*** (1.20) Mag Imposd Md / NoCom 1.62* (0.93) 1.96* (1.16) Mag Imposd Md / Com 1.28 (0.96) 0.84 (1.20) Mag Vot(Low) / NoCom 3.59*** (0.98) 3.07** (1.19) Mag Vot(Low) / Com 1.22 (0.93) 2.13* (1.16) Pacific Rgion (Pac) Pac Imposd Low / NoCom 1.46 (0.97) 0.96 (1.20) Pac Imposd Low / Com 0.67 (1.02) (1.26) Pac Imposd Md / NoCom 2.22** (0.96) 2.13* (1.20) Pac Imposd Md / Com 1.85* (0.96) 1.09 (1.20) Pac Vot(Low) / NoCom 1.35 (0.99) 0.97 (1.23) Pac Vot(Low) / Com 1.62* (0.96) (1.27) Numbr of obsrvations Prob > χ a Th dpndnt variabl is th individual s harvst, x i [1,9]. b Sinc th data only includs stag two, priod rangs from 11 to 20. *** dnots p 0.01; ** dnots p 0.05; * dnots p

29 Tabl 7: Wald tsts of hypothss rgarding individual harvst dcisions basd on th modl rportd in Tabl 6 Tst First 5 Last 5 Priods Priods Rgional diffrncs H 0 : Caribban = Magdalna = Pacific for a givn tratmnt Imposd Low/NoCom 0.02** 0.01*** Imposd Low/Com 0.01*** 0.00*** Imposd Mdium/NoCom 0.10* 0.64 Imposd Mdium/Com 0.00*** 0.22 Vot (Low)/NoCom 0.00*** 0.02** Vot (Low)/Com 0.04** 0.01*** Voting ffcts, by rgion Caribban H 0 : Imposd Low/NoCom = Vot (Low)/NoCom H 0 : Imposd Low/Com = Vot (Low)/Com 0.02** 0.00*** H 0 : Imposd Mdium/NoCom = Vot (Low)/NoCom H 0 : Imposd Mdium/Com = Vot (Low)/Com Magdalna H 0 : Imposd Low/NoCom = Vot (Low)/NoCom H 0 : Imposd Low/Com = Vot (Low)/Com 0.02*** 0.12 H 0 : Imposd Mdium /NoCom = Vot (Low)/NoCom 0.00*** 0.15 H 0 : Imposd Mdium /Com = Vot (Low)/Com * Pacific H 0 : Imposd Low/NoCom = Vot (Low)/NoCom H 0 : Imposd Low/Com = Vot (Low)/Com H 0 : Imposd Mdium /NoCom = Vot (Low) /NoCom H 0 : Imposd Mdium /Com = Vot (Low)/Com Communication ffcts whn voting, by rgion H 0 : Vot (Low)/NoCom = Vot (Low)/Com for a givn rgion Caribban Magdalna 0.00*** 0.21 Pacific *** dnots p 0.01; ** dnots p 0.05; * dnots p