Commons as insurance: theoretical predictions and an experimental test.

Summary In this paper, we deal with the impact of the safety-net use of Common Pool Resource (CPR) on the individual investment into and extraction from the commons. We propose a theoretical model with two steps: agents of the community choose to invest in their private project and in the commons. second, they choose how much to extract from their private project and the commons. The model compares two types of risk-management tool: CPR as risk coping and risk diversification mechanisms. It also compares two types of risk: risk on a private project and risk on CPR investment by other community members. In a second part of the paper, we test empirically the theoretical results through experimental economics. Such a test needs to propose a new CPR game composed of two periods, an investment one and an extraction one. We propose such an original game inspired from the two existing CPR games, Investment game (Olstrom et al.