Provision and appropriation of common-pool resources without full disclosure

Abstract

Some open systems use mutually agreed rules to determine a decentralised allocation of endogenous common-pool resources, i.e. resources that are provided by the system components themselves. The problem is that some components may not comply to the rules, and an open system cannot demand the full disclosure required to verify compliance. This requires behaviour to be monitored, but monitoring must be 'paid for' from the same resources, detracting from the system's capability to perform tasks for which it was intended. This paper addresses the problem from the perspective of principles for self-governing institutions, encapsulating a formal system of retributive justice. Experiments with a variant of the linear public good game show that self-organisation of operational-choice rules for monitoring and sanctioning can help to reduce costs, marginalise non-compliance and increase collective utility. © Springer-Verlag Berlin Heidelberg 2012.