Equity-Efficiency Optimizing Resource Allocation: The Role of Time Preferences in a Repeated Irrigation Game

Bjorn Van Campenhout, Ben D'Exelle, Els Lecoutere

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Abstract

We study repeated water allocation decisions among small scale irrigation users in Tanzania. In a treatment replicating water scarcity conditions, convexities in production make that substantial efficiency gains can be obtained by deviating from equal sharing, leading to an equity–efficiency trade-off. In a repeated game setting, it becomes possible to reconcile efficiency with equity by rotating the person who receives the largest share, but such a strategy requires a longer run perspective. Correlating experimental data from an irrigation game with individual time preference data, we find that less patient irrigators are less likely to use a rotation strategy.
Original languageEnglish
Pages (from-to)234–253
Number of pages20
JournalOxford Bulletin of Economics and Statistics
Volume77
Issue number2
Early online date12 Feb 2014
DOIs
Publication statusPublished - 2015

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