Rent Dissipation in the Presence of Negative Externalities : Does Dependency Matter?

This paper examines allocation behavior in five different economic experiments designed to approximate the conditions specified in non-cooperative models of limited-access common-pool resources, an example of allocative decision-making in the presence of negative externalities. Results obtained from all five designs confirm the prediction of sub-optimal rent accrual in this type of economic setting. However, comparing results from each of the designs, there are significant differences in rent accrual and allocation behavior, suggesting that institutional design interacts with endowments and opportunities to affect decision-making. But there is little support for the argument that economic dependency induces more socially optimal allocation