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Equity–Efficiency Optimizing Resource Allocation: The Role of Time Preferences in a Repeated Irrigation Game
Author(s) -
Van Campenhout Bjorn,
D'Exelle Ben,
Lecoutere Els
Publication year - 2015
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/obes.12058
Subject(s) - equity (law) , economics , resource allocation , tanzania , microeconomics , irrigation , environmental economics , ecology , biology , socioeconomics , political science , law , market economy
We study repeated water allocation decisions among small scale irrigation users in Tanzania. In a treatment replicating water scarcity conditions, convexities in production make that substantial efficiency gains can be obtained by deviating from equal sharing, leading to an equity–efficiency trade‐off. In a repeated game setting, it becomes possible to reconcile efficiency with equity by rotating the person who receives the largest share, but such a strategy requires a longer run perspective. Correlating experimental data from an irrigation game with individual time preference data, we find that less patient irrigators are less likely to use a rotation strategy.