The Tragedy of the Commons



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“Picture a pasture that is open to all. Each herdsman will try to keep as many cattle as possible on the commons…the inherent logic of the commons remorselessly generates tragedy.” ---Garrett Hardin, The Tragedy of the Commons 1968

  • “Picture a pasture that is open to all. Each herdsman will try to keep as many cattle as possible on the commons…the inherent logic of the commons remorselessly generates tragedy.” ---Garrett Hardin, The Tragedy of the Commons 1968



  • A key characteristic of “local” commons is that there are typically several participants (but a relatively small “several”.)

  • Hardin applied the commons metaphor to “global” commons problems such as large-scale air and water pollution and overpopulation.

  • Ostrom has concentrated her attention on local commons.



Pastures

  • Pastures

  • Woodlands

  • Fishing grounds

  • Hunting Grounds

  • Watersheds

  • Ground Water Basins

  • Oil Fields

  • Parking spaces



Instinctive economists’ approach: Model common commons problem as an “appropriation game”.

  • Instinctive economists’ approach: Model common commons problem as an “appropriation game”.

  • Common resource shared by N players, intensity of use by i is xi.

  • Payoff to player i is Pi(xi,Σxj).



Given actions of others, Pi(xi,Σxj) is increasing in xi over some range and then decreasing.

  • Given actions of others, Pi(xi,Σxj) is increasing in xi over some range and then decreasing.

  • Pi

  • xi

  • Pi(xi,Σxj) is a decreasing function of Σx



Under plausible assumptions, this game will have a unique Nash equilibrium.

  • Under plausible assumptions, this game will have a unique Nash equilibrium.

  • In Nash equilibrium each user imposes a “negative externality” on all other users, but does not take this into account when choosing his intensity of use.

  • This equilibrium will not be Pareto efficient.

  • The resource will be overused.



Centrally enforced solutions:

  • Centrally enforced solutions:

    • “Pigovian solution”: Price the externality.
      • Find the optimal solution, charge an access fee equal to the total externality caused by an extra use.
    • Legal limits on quantities extracted by each individual
  • “Enclosure” Privatize the commons by assigning property rights to exclusive use



Centrally imposed solutions require central knowledge of payoff functions and public observability of activities of each individual.

  • Centrally imposed solutions require central knowledge of payoff functions and public observability of activities of each individual.

  • They require a non-corrupt central authority.

  • They require intelligent political decision-making by central authority.



Requires enforcement of property rights and monitoring of action of users.

  • Requires enforcement of property rights and monitoring of action of users.

    • Fencing the range land.
    • Patrolling the berry patches.
  • How does one assign property rights to flowing water, swimming fish, or game in the forest?

  • Transferring property rights to a single owner introduces the holdout problem.

    • Similar to land assembly problems


Ostrom proposed that we learn from case studies of successful and unsuccessful real world common property institutions.

  • Ostrom proposed that we learn from case studies of successful and unsuccessful real world common property institutions.

  • She conducted field studies and studied the field studies of others.

  • She found that enduring institutions achieved more efficient outcomes than Nash equilibrium for simple game, but were not the predicted first-best efficient outcomes.



Mountain meadow and forests in Swiss Alps and in mountains of Japan.

  • Mountain meadow and forests in Swiss Alps and in mountains of Japan.

  • Irrigation systems in Spain, the Philippines, Sri Lanka, and Nepal

  • Fisheries in Turkey, Sri Lanka, and Nova Scotia



  • Ostrom documents overexploitation and rent dissipation

    • Fisheries in Turkey, Sri Lanka
    • Water basins in the U.S
  • Enclosure often replaces commons.



Ostrom noted that many commons problems are not one-shot games, but repeated games, played year after year.

  • Ostrom noted that many commons problems are not one-shot games, but repeated games, played year after year.

    • The Swiss canton of Törbel has maintained communal management of forests and meadows for more than 500 years.
    • Irrigation institutions in Spain are also more than 500 years old.


What does game theory predict for repeated games?

  • What does game theory predict for repeated games?

  • Folk theorem: In a repeated game without a fixed end point, if players are well-informed about each others actions, almost any behavior can be sustained as a Nash equilibrium (by strategies that punish deviations.)

  • Some of these equilibria will be efficient. Some will not be.

  • Neither Nash equilibrium of one-shot game, nor Pareto optimal outcome is a reliable predictor of outcome.



Ostrom suggests a fruitful path.

  • Ostrom suggests a fruitful path.

  • Outcomes are not well predicted by simple models that incorporate few facts.

  • Study a large number of durable and less durable institutions.

  • Look for regularities. Try to understand what happens and why.

  • This requires detailed observation, guided by

  • sophisticated theory.



  • Clear boundaries of resource and of the group who share it.

  • Congruence of benefit shares and cost shares.

  • Constitutional rules for changing operating rules.

  • Monitoring.

  • Graduated sanctions.

  • Conflict resolution mechanism.



  • Finding and enforcing a nearly efficient allocation is relatively easy in a symmetric game where it is efficient for everyone to be treated equally.

  • More challenging where there are important differences in the interests and bargaining positions of players.



  • Landholders near headwaters have advantage over those downstream.

  • Some land is more suitable for water-intensive crops.

  • Elaborate rules for allocating water under different scarcity conditons.

  • Philippines-symmetrization by allocating some land near head and some near bottom to each landholder.



  • Durable institutions must be internally stable.

  • They need not be efficient.

  • Ostrom’s case studies document this.

  • Group selection may impose some efficiency.



  • Analogy to medicine.

  • Observe what has evolved, try to understand how it works.

  • Where outcome is inefficient, seek alternative designs that are internally consistent and likely to work.

  • Mechanism designers need to observe and understand existing institutions before tinkering.

    • Example: Medical intern matching algorithm.


  • Successful commons operations are enforced by norms.

  • Norms are monitored by entire population.

  • Humans seem to have an evolved ability to generate and follow norms.

  • Like potential for language, can take many forms

  • Experimental evidence.



  • Where does altruism enter?

  • Helps when information is incomplete

  • Limits variety of solutions in repeated games.

  • Kin selection theory and the family as a commons.



  • Agriculture displaces hunter gathering.

  • Fixed, appropriable resources.

  • Cheaper fencing makes enclosure of pastures possible.

  • Manufacturing allows clear ownership rights.

  • But the information economy is a commons.





  • Information economy has been described as an “anti-commons”.

  • Instead of a game in which substitute goods are depleted, complement goods are added by individual contributors.

  • Nash equilibrium has undersupply.

  • Privatizing ideas with patents does not help.



Success Stories

  • Success Stories

    • The internet
      • Open access publishing
      • Open source software
    • Patent pools
    • Google
    • Wikipedia
  • Tales of Woe

    • Patent morasses
    • Monopolies


Nobel ceremonies, a week of celebration of science.

  • Nobel ceremonies, a week of celebration of science.

  • Work of Ostrom dramatizes the potential of social science as a multidisciplinary, multi-method commons.

    • Theory, case studies, experiments
    • Political Science, Economics, Game theory, History, Anthropology, Ecology
  • Antidote for inbreeding--Hybridization







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