Strong and Weak Rarity Value: Resource Games with Complex Price–Scarcity Relationships

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Abstract

We analyze effects of rarity value on the sustainability of a natural resource. Rarity value means that under extreme scarcity of the resource unit profits increase ‘explosively.’ We focus on equilibrium behavior of very patient agents in a Small Fish War. Agents interacting on a body of water have two options: they can fish with restraint or without. Fishing with restraint allows the fish stock to recover; fishing without yields higher immediate but lower future catches. We distinguish weak and strong rarity value; for the strong (weak) variant, total symmetric Pareto-efficient rewards are higher (lower) than those obtained by keeping the price fixed at highest-resource-stock level. Only for strong rarity value, the price effect more than compensates for smaller sustainable catches. Pareto-efficient equilibrium behavior dictates that lowest sustainable stocks are targeted
Original languageEnglish
Pages (from-to)97-111
JournalDynamic games and applications
Volume6
Issue number1
DOIs
Publication statusPublished - 23 Mar 2016

Keywords

  • METIS-310471
  • IR-95845

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