A cooperative incentive equilibrium for a resource management problem (Q2366878)

This paper employs standard bioeconomic assumptions to model an interaction between two whaling nations as a two-player, noncooperative, dynamic game. In general, it assumes each nation to have precise information about the other's whaling effort and to incorporate this information into its strategy. In particular, it describes a class of piecewise-linear strategies called affine incentive strategies, and it shows how to construct no-memory equilibrium pairs that support a given cooperative (Pareto-optimal) solution. Numerical results suggest that these equilibrium strategies are credible, i.e., each nation believes that the other will follow its announced strategy. Time-lag strategies are also considered. An attractive feature of the analysis is that threat strategies are continuous in available information: retaliation for a slight deviation from agreed whaling effort does not precipitate a rapid decrease in the number of whales, as in some earlier fishery management games.