Economics / Policy

Three overly-simplistic models of the commons

Below is a short discussion of three influential models on the commons; (1) The Tragedy of the Commons; (2) The Prisoners Dilemma Game; and (3) The Logic of Collective Action. Following this, I discuss why these overly-simplistic models have little traction in reality, and how unfortunately public policy was, and remains, strongly influenced by their legacy. Public policy should have no place for simplistic analogies. The literature is moving on, public policy isn’t.


The Tragedy of the Commons

Unfortunately, Hardin (1968) has become the initial model of thought for economists considering common property. Combining an ‘open to all’ pasture with self-interested herders, the model predicts unavoidable depletion[1]. This eloquent passage describes the majority opinion for many decades:

“Ruin is the destination to which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons” (Hardin 1968, p 1244)

Twelve years earlier, similar concerns were also expressed:

“Wealth that is free for all is valued by no one because he who is foolhardy enough to wait for its proper time of use will only find that it has been taken by another” (Gordon 1954, p124)

The Prisoners’ Dilemma Game

The Prisoner’s Dilemma Game[1] has been an important model for formalising Hardin’s Tragedy into game theoretic terms. The easy tractability of the PD game has led it to become the most famous social dilemma. In the most elementary model, the players in the game were assumed to be non-cooperative, possess complete information, and not repeat games[2]. These simplistic assumptions result in a third-best, pareto-inferior outcome[3]. This model has remained an important step on the path to examining the concepts of rationality, group welfare and the market. This problem has fascinated scholars, leading to a huge number of published articles on the topic. Many of these paper enforce differing assumptions, with vastly more positive outcomes. Unfortunately, most only read the most elementary model.

The Logic of Collective Action

Olson (1968) explored the relationship between individual and group preferences,introducing the challenges of human organisation through the ‘free-rider’ problem. Olson explores the link between self-interested individuals and their quest to pursue joint welfare. Although the work as a whole is considered pessimistic, it provides optimism through introducing the impact of size, and the level to which defecting is visible, on group ability to pursue common outcomes. The relationship between individual and group preferences is best described below:

“Though all of the members of the group … have a common interest in obtaining this collective benefit, they have no common interest in paying the cost of providing that collective good. Each would prefer that the others pay the entire cost, and ordinarily would get any benefit provided whether he has borne part of the cost or not.” Olson (1968, p21)

Public Policy

The three models above are simplistic conceptualisations of an extremely complex problem. Yet, they have remained influential on public policy. Only viewing these widely cited models, the commons are the unfavoured third institutional solution.

The ‘default’ move for policy makers when encountering common property is to develop private or public solutions to avoid this tragedy. These are achieved by changing the underlying institutions; including the implementation of private property rights to separate out the group interests, or by using coercion to centralise rights into various authoritative organisations.

The simplicity of the three models presented above provides a fantastic concept for the classroom. Yet, they are no basis for public policy. The assumptions remain inadequate in a complex and interconnected world.

As a whole, these models form an extremely sparse view of the commons (Ostrom, 2007).  Hess and Ostrom (2006, p11) describe four particular aspects that do not transfer to reality:

“… (1) [Hardin] was actually discussing open access rather than managed commons; (2) he assumed little or no communication; (3) he postulated that people act only in their immediate self-interest… ; (4) he offered only two solutions to correct the tragedy – privatization or government intervention.” 

[1] The game was developed in the early 1950s by A. W. Tucker, see Cunningham 1967)

[2] See Dawes (1973, 1975)

[3] Each player with defect on cooperation using their dominant strategy, resulting in a collectively non-rational outcome from individually rational strategies.

[1] Aristotle and Hobbes were among earlier scholars to observe this tragedy, yet it was Hardin’s parable that gained traction.


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