Conference Agenda

We extend the classical discrete time great fish war game to a stochastic framework in which random shocks determine the reproduction capabilities of the resource and the probability of shock realizations depends on the resource stock. We allow the probability of the most adverse shock realization to either decrease or increase with the resource stock to represent the specific biological and ecological characteristics of the resource related to whether risk buffer or risk amplification mechanisms are predominant. We show that both under noncooperation and cooperation harvesting choices are directly affected by uncertainty, and when the probability function is decreasing (increasing) the harvesting policy prescribes a larger (smaller) preservation of the fish stock than in the absence of uncertainty. This suggests that a precautionary approach to resource management is actually desirable only when the probability function is decreasing. We also characterize the features of the invariant resource distribution the economy converges to in the long run, analyzing how the properties of the probability function affect the invariant distribution in the noncooperative and cooperative frameworks. Even if cooperation leads to a rightward shift in its support, whether cooperation leads the distribution to concentrate more mass towards larger or smaller resource stock values depends on the nature of the probability function. This suggests that effective resource policies should be specifically designed to account for the biological and ecological peculiarities of different resources