Effect of social context and group Effect of social context and group conformation on cooperation conformation on cooperation levels: levels: Application of IAD framework and Application of IAD framework and

experimental evidence from an irrigation system experimental evidence from an irrigation system in Costa Rica.in Costa Rica.

Author:Author: Róger Madrigalrmadriga@catie.ac.cr

Structure of the Structure of the presentationpresentation

Case study: Application of IAD (Institutional Analysis and Development Framework)Experimental evidence

The Voluntary Contributions MechanismTrust gameUltimatum game

Application of IAD Application of IAD frameworkframework

Two moments in time (1993 and 2003)

How do institutional changes affect water use patterns?

Arenal Tempisque Irrigation District Arenal Tempisque Irrigation District (DRAT)(DRAT)

Located in a complex watershed: tourism, hydroelectric generation, irrigation and protected areas (RAMSAR site) 30 000 ha, mainly rice and sugar

cane Poor water use Administered by the Central

Government Lack of farmers´ organization

Attributes of physical worldLimited water, pumped from riverConcrete canalsHigh rice productivity (7-8 ton/ha)

Attributes of communityHomogeinity (Long time horizons, live near their plots, young people)Willingness to collective workFamiliarity among the 60 farmers

Rules-in-useRotation, low final drainages, water reutilization, crop schedulingConflict resolution mechanisms for small disputesEvery farmer participates in maintainance of canals

Action arena Interactions

Outcomes

Evaluative criteria

1993 Situation

Attributes of physical world

Attributes of community

Rules-in-use

Action arena:SENARA, Users

Association, other governmental

institutions

InteractionsCollective work,

coordination among institutions

(promoted by SENARA)

OutcomesWater use efficiency 93%

Quality in serviceMaintenance labor by users (received money

further invested in roads, schools)

1993 Situation

Evaluative criteriaEquity (between benefits and costs, social inclusion, among users)Low monitoring costs (due to rotation rules. etc)Sanctioning (only social but no legal possibilities to punish free-riders on maintenance or excessive waste of water)

Attributes of physical worldAbundant water (with temporal scarcity)Lower rice productivity (4-5 ton/ha)

Attributes of communityHeterogeneity among users, uncertainty, plot renting, absentee landlordsUnsuccessful experiences with previous organization attemps

Rules-in-useNo rotation, high final drainages, no reutilization of water“Ilegal” manipulation of gates

Action arena Interactions

Outcomes

Evaluative criteria

2003 Situation

Attributes of physical world

Attributes of community

Rules-in-use

Action arena:SENARA and independent

farmersUsers Association no longer exists

InteractionsMinimal interaction, SENARA provides all services to farmers (subsidized system)

Farmers work individually

OutcomesPoor water use efficiency

69%Low quality service

Canals maintainance by SENARA only, no

organization of farmers for using water

2003 Situation

Evaluative criteriaNo equity (disproportionate benefits, social exclusion on decisions, some farmers obtain more water than others)High monitoring costs (no rules, absentee landlords)No sanctioning (social punishment is ineffective, no legal possibilities to deter free-riding or excessive waste of water

LessonsLessonsWater scarcity is not a sufficient condition to promote cooperation towards water use. A set of conditions from the community (homogeneity, shared temporal horizons, shared norms, similar interests) is also needed. Rol of governments:

If governments want to decentralize its activities, they must give communities the power to make decisions (legal possibilities to sanctioning, fundraising etc) Government intervention can be positive (information, mediator among actors) to raise cooperation levels.

Experimental evidenceExperimental evidenceA group of 20 students from CATIEMSc level, different backgroundsNo experience with experimental economicsAge average: 30 years oldWritten instructions, readed it aloud. Played with poker cards to facilitate understanding

A group of 30 farmers from DRATMost of them with only elementary schoolPoor small farmers: (mainly of rice and sugar cane)Age average: 50 years oldNo written instructions, round of practice, help to fill out the answer sheets. Played with poker cards

This game represents a similar situation to those faced by farmers who organize

around irrigation canals maintainance or another collective objetive

Cooperate with others Cooperate with others (group exchange) (group exchange)

Act individually and Act individually and enjoy others effort enjoy others effort (private exchange)(private exchange)

1. The Voluntary-Contributions 1. The Voluntary-Contributions MechanismMechanism

VCM: Simple repetitive game. Decisions are private and annonimous. No possibilities for communication. Incentives

to free-ride

Average contribution per group

0

0,2

0,4

0,6

0,8

1

1 2 3 4 5 6 7 8 9 10 11 12

Rounds

Average contribution

(% of maximum

cooperation per round)

La SogaCATIE

Key resultsKey resultsStrong effect of comunication on cooperation levels for the case of students (p>0.01). This is only for round inmediately after communication, then cooperation decaysFarmers seem insensitive to communication ¿?

Policy Policy implicationsimplications

1.1. Even when the benefits for cooperating are self evident for everyone, some

individuals will try to obtain them free (cause of cooperation decay in case

study)

Need for monitoring, control and Need for monitoring, control and effective sanctionseffective sanctions

2.2. Cooperation levels of producers are relatively low, in spite of

communicationcommunication (powerful tool but ineffective unless it rises mutual

trust)It is not enough to foster social It is not enough to foster social

communication unless other communication unless other necessary conditions of the group necessary conditions of the group hold (similar interests, previous hold (similar interests, previous

experiences of cooperation, experiences of cooperation, cohesion, trust, leadership?)cohesion, trust, leadership?)

3.3. Agreements and communication can have a strong effect in a group with identity and social cohesion

(students) but even in that situation, it is not a sufficient condition to

maintain cooperation levels. Grim-trigger hypothesis

Monitoring and sanctioning are Monitoring and sanctioning are crucial to self regulating crucial to self regulating

organizations, otherwise people could organizations, otherwise people could try to punish free-riders by defectingtry to punish free-riders by defecting

Trust and reciprocity are key elements for building cooperation and social capital. Hence, these factors are necessary for

allocation decisions and the maintenance of irrigation canals

2. Trust game2. Trust game

Trust others to gain more

money but with a higher risk of

loosing everything

Defect and gain a small

amount of money

Repeated Prisoner’s dilemma structure, similar to Ahn et al 1999.

Pairs of players, annonimous, no communication

Ronda 1 Ronda 2 Ronda 3

0%

10%

20%

30%

40%

50%

60%

70%

Red cards interchanges, groups averages

La Soga

CATIE

Round 1

Round 2

Round 3

Additional resultsImportance of previous result on

present individual decision (inequity aversion hyphotesis, Fehr and

Schmidt 1999) : When somebody received less than he gaves, tends to give less in the next

round...Similar, when somebody received more than he gaves, tends to give more in the

next roundImportance of reciprocityImportance of reciprocity

Ostrom, E (2003): Lists 6 reciprocity norms that some people are likely to use when confront a repetitive social

dilemmaThe results of this game support the

following reciprocity norm:

Mimic norms 1 or 2 (1.always cooperate first; stop cooperating if

others do not reciprocate; and punish non-cooperators if feasible 2.

Cooperate immediately only if you judge others to be trustworthy; stop

cooperating if others do not reciprocate; punish non-cooperators if feasible), but stop cooperating if you can successfully free ride on

others

Policy Policy implicationsimplications

Inequities (social exclusion, differential access to water) can lead to a downward spiral of cooperation. Start reducing inequities!Farmers showed lower levels of mutual trust. Previous social linkages and past experiences of cooperation matter. It is difficult to “promote” an effective decentralization process in this setting. It requires a long and costly process of building social capitalGroup differences don`t matter when there is no chance of future interaction (Most people try to free ride in these cases). A necessary condition to a sustainable organization is a solid long term perspective from of all of participants

3. Ultimatum game3. Ultimatum game

The core relationships in repeated social dilemmas are the links among mutual trust, the investment others make in

trustworthy reputations and the probability of using reciprocity norms. Boundedly

rational individuals use reciprocity based on their prior experience (socialization) and

their own norms

Subjects frecuently offer the fair (50-50) division

Contradicts the model of rationality

It suggest the “punishment hypothesis ”, based on reciprocity

Suggest a division of a

fixed pie

1

2

Decides to accept or reject

the offer

One shot, sequential

game

0%10%20%30%40%50%60%70%80%

1 300 400 450 475 500 1000

Money

Offers frecuency, initial player

CATIE

La Soga

Policy Policy implicationsimplications

Group characteristics, past experiences using reciprocity and risk aversion of small farmers may explain the higher frecuency of “fair” divisions. It is necessary to consider poor farmers decission making processPoor farmers may prefer tangible inmediate benefits from cooperation rather than uncertaintaty future benefits from such interaction

Thanks!!