5. The problem of overuse Aa Aa E Alex, Manuel, and Steve are fishermen who live

Question

5. The problem of overuse Aa Aa E Alex, Manuel, and Steve are fishermen who live next to a lake that is open to fishing; in other words, anyone is free to use the lake for fishing. Assume that these men are the only three fishermen who fish in this lake and that the lake is large enough for all three fishermen to fish intensively at the same time. Each year, the fishermen choose independently how many fish to catch; specifically, they choose whether to fish intensively (that is, to place several fishing lines in the water for long periods of time, which hurts the sustainability of the lake if enough people do it) or to fish nonintensively (which does not hurt the sustainability of the lake). None of them has the ability to control how much the others fish, and each fisherman only cares about his own profitability and not the long-term sustainability of the lake. Assume that as long as no more than one fisherman fishes intensively, there are enough fish to restock the lake. However, if two or more fish intensively, the lake will become useless. Of course, fishing intensively earns a fisherman more money because he can sell more fish. The lake is an example of because it is and Suppose Manuel and Steve both choose to fish either nonintensively or intensively. Fill in Alex's most rational response in the following table, given Manuel and Steve's action. Manuel and Steve's Action Fish Nonintensively Fish Intensively Alex's most rational response: - Fish nonintensively Fish intensively Which of the following solutions could ensure that the lake is sustainable in the long run? Check all that apply. O O O Develop a program that entices more fishermen to move to the area. Outlaw fishing intensively. Convert the lake to private property and allow the owner to sell fishing rights.

Explanation / Answer

The lake is an example of strategic competition.

If Manuel and Steve decide to:

a) Fish Intensively, then Alex's best response is to fish intensively.

b) Fish nonintensively, then again best response is to fish intensively.

Outlawing fishing intensively could ensure that the lake is sustainanble in the long since it is in the interest of everybody to fish intensively.

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