Social Capital and Economic Development
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Social Capital and Economic Development

Well-being in Developing Countries

Edited by Jonathan Isham, Thomas Kelly and Sunder Ramaswamy

The chapters in this volume explore the challenges and opportunities raised by this concept for researchers, practitioners and teachers. Social Capital and Economic Development is based upon a consistent, policy-based vision of how social capital affects well-being in developing countries.
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Chapter 8: Rethinking Local Commons Dilemmas: Lessons from Experimental Economics in the Field

Juan-Camilo Cardenas


Juan-Camilo Cardenas1 This chapter considers two fundamental questions related to the role of social capital in the management of common-pool resources (CPRs) like local fisheries or forest reserves. Why do some local groups around the world succeed in collectively managing CPRs while other local groups drive such resources close to exhaustion? Why do some individuals who extract resources from CPRs behave like homo economicus – that is, act only to maximize their own welfare without regard for others’ welfare – while others do not? While many theoretical and empirical studies have addressed these questions (Ostrom, 1990; Putnam, 1993; Bowles, 1999), much of the discussion of CPR management still does not refer to new theoretical, empirical and experimental contributions that have emerged since Garret Hardin’s prediction about the ‘tragedy of the commons’ (Hardin, 1968) and Mancur Olson’s characterization of ‘the logic of collective action’ (Olson, 1965). This chapter emphasizes those contributions. The chapter begins by highlighting recent advances in the analysis of CPRs. The chapter then presents a set of results from field experiments conducted in actual CPR settings in rural Colombia. The results of these experiments provide empirical evidence of some of the new developments in the literature, thereby shedding additional light on the limits of the conventional view about CPR dilemmas and human behaviour. The chapter concludes by highlighting the prospects for a methodological approach that includes economic experiments in the field and in the classroom, and in which the participants (villagers or students) become an active part of the analysis....

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