Characterizing Heterogeneous Behavior of Non-Point-Source Polluters in a Spatial Game under Alternate Sensing and Incentive Designs

Abstract

Behavioral research on natural resource management has revealed a number of variables that can impact collective action. This research builds upon an interactive decision game using experimental economics methods with a focus on production decisions and the corresponding impact they have on ambient water quality. Using hierarchical clustering algorithms, four primary types of behavior are identified: competitive, hypercompetitive, cooperative, and hypercooperative. The results from the experiment are used to test the following three hypotheses: (1) financial incentives increase cooperative behavior, (2) increasing the number and frequency of water quality sensors increases cooperative behavior, and (3) the spatial location of the agents and sensors affect cooperative behavior. Mixed-effect multinomial logistic models reveal that policy incentives, sensor location, and frequency of sensing alter the behavioral strategies of decision makers in the experiment and that outcomes vary by spatial location. From a watershed planning perspective, minimal investments in advanced environmental monitoring/sensing systems can potentially have large effects in improving water quality; however, there is also some evidence of marginal diminishing returns associated with such investments.