The Tragedy of the Commons

08 Jun 2017

"The Tragedy of the Commons" is a well-known economic parable that describes a scenario where the action that is optimal for each actor leads to global ruin:

This was the situation of cattle herders sharing a common parcel of land on which they are each entitled to let their cows graze, as was the custom in English villages. He (William Forster Lloyd) postulated that if a herder put more than his allotted number of cattle on the common, overgrazing could result. For each additional animal, a herder could receive additional benefits, but the whole group shared damage to the commons. If all herders made this individually rational economic decision, the common could be depleted or even destroyed, to the detriment of all.

This may remind you of "the prisoners' dilemna", which is related:

Two partners in crime are arrested. The criminals cannot communicate with each other. The prosecutor offers both criminals a deal: testify and you will be set free while your accomplice serves a three years term. If both testify, however, both criminals will spend two years in prison. If none testify, they will both spend one year in prison. It is assumed that the decision will have no repercurssions beyond the time spent in prison.

Under this scenario, the dominant strategy is to betray one's partner. Whatever the partner ends up doing, you'll end up better if you betray him than if you don't.

In both the tragedy of the commons and the prisoner's dilemna, there is a rational and superior decision for all participants. And yet if everyone picks this solution, the outcome is worse than what could be achieved through collaboration.

Of course human beings do not work with mechanistic rationality. The prisoners' dilemna in particular is very unlikely to play out this way, because of the stigma incurred by snitching. Beyond that, basic moral principles would probably factor in.

Commons-type situations, however, are much more common. On its face, the parable is about a shared ressource (the titular "commons" — shared pastures). You probably know fairly well that some people are much less careful with shared goods than with their own private property. Even more abstract ressources, such as a buffet or public toilets tend to be abused.

At the core of the abuse is this reflection: I won't pay the consequences, so why bother? Of course, if everyone thinks like that, there will be consequences, for everyone.

At a more global level too, the tragedy of the commons is present. Pollution is a prime example: if a little bit of pollution will turn a bigger profit, why abstain?

There is usually a fairly big moral stigma associated with taking the rationally selfish decision in a commons-style situation. This is a natural defense again situations we realize would be ruinous.

Yet being selfish can be so tempting... Not least because it is perfectly logical. If others are doing it, why should I abstain? If no one else is doing it, where is the harm? Note the similarity to the reasoning in the prisoners' dilemna: you have cause to be selfish no matter what the others do.

There are other reasons why it is easy being selfish. First, our actions might seem individually insignificant. Second, unlike the prisoners' dilemna, the other parties are a vast anonymous mass, to which you owe little or no loyalty. Being selfish in the prisoners' dilemna is betraying a comrade. Polluting the environment is, at first approximation, a victimless crime.

It's so easy in fact that we are very quick to make the selfish decision, when no-one is looking or can find out, or when the profit outweighs the loss of moral status.

And that's why — plot twist — we have regulations and need the government. In its pure and ideal form, the government is a way to make globally optimal decisions and ensure that all actors play by the rules. The government proclaims the rules, sets and enforces punishments in case of violations, and actively seeks to find out violators.

I'm not sure that the role of the government as a shield against "tragedies of the commons" is well understood, yet it is absolutely primordial. I'm not sure even politicians understand it, beyond protecting citizens from violence and abusive business practices — which to be sure are two important commons-style situation, but also happen to be those that they can pander with fearmongering.

Even at a smaller scale, the spirit of the solution is remarkably similar. Make a binding agreement that includes all concerned parties. Plan for some negative consequences should the agreement be broken (shame, shunning and exclusion are good basic tactics), and finally don't forget to look for violators.

To conclude, I am not going to encourage you to act selflessly. You have nothing to gain, as this article makes clear. But I hope you can now recognize commons-type situations, and understand the kind of solutions that can be deployed against them.