Environmental Engineering Reference
In-Depth Information
10. Exploring game theory as a tool for
mapping strategic interactions in
common pool resource scenarios
Vanessa Pérez-Cirera
Introduction
The objective of this chapter is to introduce game theory as an analytical
tool for understanding and mapping strategic interactions amongst indi-
viduals and institutions in the management of common pool resources.
The chapter on the economics of common property resources explores
the relation between poverty and property rights in natural resource
management and emphasizes the role of transaction costs in the govern-
ance structure of common property systems and how these costs shape
the outcome of these systems (Adhikari, Chapter 5, this volume). The
chapter on the economic valuation of the dif erent forms of land-use in
Tanzania emphasizes the importance of identifying and incorporating
non-marketed/non-priced values of environmental goods and services and
how such valuations can be undertaken so that optimal levels of land-use
are identii ed (Kirby, Chapter 11, this volume). A question that remains
open is if and how these optimal solutions can be reached. This section
intends to contribute towards this broad question by introducing game
theory as a useful analytical tool that helps us understand how decision-
making processes are made in the management of common pool resources.
The review explains how strategic decision-making can be mapped in
a game-theoretic fashion so that variables that are key for arriving at
socially optimal solutions can be identii ed.
The i rst section of the chapter gives an introduction to game theory as
a method for the construction of game-theoretic models, introducing the
reader to game-theoretic language and representation forms. The second
section will review the most frequently used games for depicting problems
encountered in CPR settings and illustrate the use of game theory in
analysing binding agreements as institutional solutions to CPR dilemmas.
The last section will aim to illustrate how game theory can be applied
to understanding decision-making processes and assessing the desir-
ability and viability of policy options with illustrations from semi-arid
Tanzania.
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