Only in Econ 315!

After a nice and relaxing free weekend in Salzburg, Austria, we met up with the rest of the group Monday morning in Trento. It was defiantly good to be back on Italian soil!

In Trento we had a meeting with a professor who talked to us about common-pool resources. From there we got on a bus and went to Cavalese, a small cute village in the Italian Alps. The next day, Tuesday, we had another meeting about common-pool resources. We met with some board members of the “Magnifica Comunita di Fiemme.” Magnifica Comunita dates back to the 12^th century and represents the inhabitants of the 11 villages in the valley Di Fiemme. As an inhabitant of the valley you have shared ownership and rights to use the land, for example to hunt and to fish. The goal of Magnifica Comunita is to manage and preserve the collective property (mainly wood and pasture land) and to use the revenues to give back to the community. This institution is quiet successful compared to many similar institutions. A few years ago the Magnifica Comunita was able to build a local hospital using wood from their forests.

Cavalese

Corey and I were given an article called “Decentralized management of common property resources.” For centuries, villages in the Alps have used this special system, like the Magnifica Comunita, to manage their common resources. Every inhabitant can inspect other inhabitants (making sure there are no free riders) at their own cost, inflict punishments and be rewarded for doing so under clear defined legal laws. There are two types of “inspectors”, the spiteful ones and the altruistic ones. The spiteful individual experiences a loss in utility when others income increases, but his or hers remains constant. The altruistic individual experiences a gain in utility when others income increases but his or her income remains the same. The gain in income comes from when an inspector gets part of the fine the “free rider” must pay.  Normally altruistic behavior is favored, but that is not the case in this system. It is also one of the reasons why this system is successful. The system channels attitudes that might normally be considered dysfunctional into useful social preferences.

We had a lot of free time in Cavalese and of course the highlight was skiing in the Alps. As we like to say, “Only in Econ 315 can you get this experience!”

Econ 315 skiing!