Effect of social context and group
conformation on cooperation levels:
Application of IAD framework and experimental evidence
from an irrigation system in Costa Rica.
Author:
Róger Madrigal
rmadriga@catie.ac.cr
Structure of the presentation
Case study: Application of IAD
(Institutional Analysis and Development
Framework)
Experimental evidence
The Voluntary Contributions Mechanism
Trust game
Ultimatum game
Application of IAD framework
Two moments in time (1993 and 2003)
How do institutional changes affect
water use patterns?
Arenal Tempisque Irrigation District (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 community
Homogeinity (Long time horizons,
live near their plots, young people)
1993 Situation
Willingness to collective work
Familiarity among the 60 farmers
Attributes of physical world
Limited water, pumped from river
Concrete canals
Action
arena
Interactions
High rice productivity (7-8 ton/ha)
Outcomes
Rules-in-use
Rotation, low final drainages, water
reutilization, crop scheduling
Conflict resolution mechanisms for
small disputes
Every farmer participates in
maintainance of canals
Evaluative
criteria
1993 Situation
Attributes of
community
Attributes
of physical
world
Action arena:
SENARA, Users
Association, other
governmental
institutions
Rules-inuse
Evaluative criteria
Equity (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)
Interactions
Collective work,
coordination among
institutions (promoted
by SENARA)
Outcomes
Water use efficiency 93%
Quality in service
Maintenance labor by users
(received money further
invested in roads, schools)
Attributes of community
Heterogeneity among users,
uncertainty, plot renting,
absentee landlords
2003 Situation
Unsuccessful experiences
with previous organization
attemps
Attributes of physical world
Abundant water (with
temporal scarcity)
Action
arena
Interactions
Lower rice productivity (45 ton/ha)
Outcomes
Rules-in-use
No rotation, high final
drainages, no reutilization of
water
“Ilegal” manipulation of gates
Evaluative
criteria
2003 Situation
Attributes of
community
Interactions
Action arena:
Attributes of
physical
world
Rules-in-use
SENARA and
independent farmers
Users Association no
longer exists
Minimal interaction,
SENARA provides all
services to farmers
(subsidized system)
Farmers work individually
Outcomes
Evaluative criteria
No 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 freeriding or excessive waste of water
Poor water use efficiency 69%
Low quality service
Canals maintainance by
SENARA only, no organization
of farmers for using water
Lessons
Water 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 evidence
A group of 20
students from CATIE
MSc level, different
backgrounds
No experience with
experimental
economics
Age average: 30 years
old
Written instructions,
readed it aloud. Played
with poker cards to
facilitate understanding
A group of 30 farmers
from DRAT
Most of them with only
elementary school
Poor small farmers:
(mainly of rice and
sugar cane)
Age average: 50 years
old
No written instructions,
round of practice, help
to fill out the answer
sheets. Played with
poker cards
1. The Voluntary-Contributions Mechanism
This game represents a similar situation to those
faced by farmers who organize around irrigation
canals maintainance or another collective objetive
Act individually and enjoy
others effort (private
exchange)
Cooperate with others
(group exchange)
VCM: Simple repetitive game. Decisions are private and annonimous.
No possibilities for communication. Incentives to free-ride
Average contribution per group
Average
contribution 1
(% of
0,8
maximum
cooperation 0,6
per round) 0,4
La Soga
CATIE
0,2
0
1 2 3 4 5 6 7 8 9 10 11 12
Rounds
Key results
Strong effect of comunication on
cooperation levels for the case of
students (p>0.01). This is only for round
inmediately after communication, then
cooperation decays
Farmers seem insensitive to
communication ¿?
Policy implications
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 effective
sanctions
2. Cooperation levels of producers are
relatively low, in spite of
communication (powerful tool but
ineffective unless it rises mutual trust)
It is not enough to foster social
communication unless other necessary
conditions of the group hold (similar
interests, previous experiences of
cooperation, cohesion, trust,
leadership?)
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 crucial to
self regulating organizations, otherwise
people could try to punish free-riders by
defecting
2. Trust game
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
Repeated Prisoner’s dilemma structure,
similar to Ahn et al 1999. Pairs of players,
annonimous, no communication
Defect and
gain a small
amount of
money
Trust others to gain
more money but
with a higher risk
of loosing
everything
Red cards interchanges,
groups averages
70%
60%
50%
40%
La Soga
30%
CATIE
20%
10%
0%
Ronda11
Round
Ronda
Round 22
Ronda33
Round
Additional results
Importance 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 round
Importance of reciprocity
Ostrom, E (2003): Lists 6 reciprocity norms
that some people are likely to use when
confront a repetitive social dilemma
The 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 implications
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 capital
Group 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 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
1
One shot,
sequential game
Suggest a division
of a fixed pie
2
Decides to accept
or reject the offer
Subjects frecuently offer the fair (50-50) division
Contradicts the model of rationality
It suggest the “punishment hypothesis ”, based
on reciprocity
Offers frecuency, initial player
80%
70%
60%
50%
40%
30%
20%
10%
0%
CATIE
La Soga
1
300
400
450 475
Money
500 1000
Policy implications
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 process
Poor farmers may prefer tangible inmediate
benefits from cooperation rather than
uncertaintaty future benefits from such
interaction
Thanks!!