The value-added of laboratory experiments for the study of institutions and common-pool resources

This article provides an overview of the effects of communication on experimental studies of behavior and outcomes in common-pool resource (CPR) dilemmas. Aggregate outcomes in CPR dilemmas without communication approximate predictions of non-cooperative game theory, but allowing cheap talk results in higher outcomes. When exogenous rules are monitored at realistic levels, subjects cheat even though following the rule would generate optimal outcomes. If given the opportunity, experimental subjects will devise their own rule systems and impose sanctions on each other. These findings complement field research on more complex resources and communities by confirming the critical importance of communication and endogenous rule formation.