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Does the paradox of plenty exist? Experimental evidence on the curse of resource abundance

Published online by Cambridge University Press:  14 March 2025

Andreas Leibbrandt  and
John Lynham
Andreas Leibbrandt*
Affiliation:
Department of Economics, Monash University, Clayton 3800, Australia
John Lynham*
Affiliation:
Department of Economics and UHERO, University of Hawai’i, Honolulu, HI 96822, USA
*
[email protected]
[email protected]
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Abstract

There is conflicting evidence about whether abundant resources are indeed a blessing or a curse. We make use of specially designed economic experiments to investigate how resource abundance affects cooperation in the absence or presence of regulatory institutions. We observe that in the absence of regulatory institutions, there is less cooperation in groups with access to large resource pools than in groups with access to small resource pools. However, if regulatory institutions are present, we show that there is more cooperation in groups with access to large resource pools than in groups with access to small resource pools. Our findings also reveal that resource users are more willing to regulate access to abundant than to small resource pools. These findings provide causal evidence for the “paradox of plenty” and identify the causes for the pitfalls and potentials of resource wealth.

Keywords

Lab experimentStakesInstitutionsRent seeking
Type
Original Paper
Information
Experimental Economics , Volume 21 , Issue 2 , June 2018 , pp. 337 - 354
Copyright
Copyright © 2017 Economic Science Association

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