

Investment Game 
Ostrom, Gardner, & Walker (1994) conducted a series of experiments designed to test how individual behavior in a commonpool resource framework depends on the institutional setting. Their framework was as follows: 
Within the investment game, individuals are given an endowment of tokens that they can decide to either keep or invest in an investment account. The return on the investment account is determined by the aggregate group investment. For small levels of investment the return exceeds the individual private return. However, if aggregate investment exceeds a given level the return from the investment account becomes less than the individual's private return for not investing. This is achieved using a quadratic return function for the investment account. The functional form is as follows: 
U(i) = w * (e  x_{i}) + [(x_{i}))/(X)]*[ a * (X)  b(X)^2] 
where U(i) is the utility that person i derives within the experiment, w is the private return on an individuals retained endowment, e is the individual endowment, x(i) is person i's investment, (X) is the sum of the groups investment and a and b are coefficients in the quadratic return function. Using this theoretical model and experimental design Ostrom, Gardner, and Walker compared the subject behavior to the symmetric NashEquilibrium predictions. Their findings indicate that the individual investment decisions do not follow the symmetric NashEquilibrium predictions. 
Alternative experimental framework for the investment game 
Ebenhöh tested a similar investment game framework. She also introduced a communication treatment, as either a oneshot communication or repeated communication, after the tenth round. A total of 20 to 30 rounds were played. Her setting used the following parameters: 
Theoretical Predictions: The Nash equilibrium strategy is to invest 8 tokens in the common resource, while the group optimum is to invest 4.5 tokens per subject (a total of 36 tokens). 
Experimental Results 
Total investment tended to follow a pulsing pattern. Investment often started high, yielding negative returns, but then dropped to profitable levels. However, there would soon be overappropriation again, in later rounds, after the return from Market 2 had exceeded the return from Market 1. The variance in yields decreased over time, but there was no stabilization. 
References 


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