Observability and stakeholder conflict in resources management

Abstract

Heuristic learning from personal experience is hard-wired in humans, but overreliance on experiential samples may lead to biased beliefs when such samples are not representative of the population. Prominent examples include skepticism towards climate change and an increasingly vocal anti-vaccine movement. In turn, biased beliefs may lead to stakeholder conflict when different parties hold competing views of reality and financial stakes are high. In this paper we focus on the commercial fishing industry. We develop a theoretical model to study harvesters’ incentives to challenge the science that informs management when the claims of official science are at odds with their personal experience. In the empirical application, the case of the Georges Bank cod fishery, we estimate the distribution of extra profits industry would expect to earn if their view of science were incorporated into policy. Our findings show strong incentives to lobby for lax regulations even when harvesters hold relatively low confidence in their own beliefs. An impatient industry would have strong incentives to challenge the official science. While the stock would eventually collapse in this scenario, leading to welfare losses, the crash of the cod population would take time. The industry’s overreliance on first-hand observations will ultimately undermine its own interests. This paper highlights the importance of effectively communicating and translating the technical aspects of science to the relevant audiences, particularly those directly impacted by its use in policy.