Tragedy of the Commons

When a resource is commonly owned, it will be overused. Consider a fish-filled lake that everyone has the right to use. If overfished, the lake will die. Unfortunately for the fish and fishermen, however, overfishing is probably a dominant strategy. Imagine you are one of 1,000 fishermen, and each of you can fish at a low or high level. If most people fish at a high level, the lake will become depleted of fish. If just you choose the low level, however, it really won’t make any difference. Consequently, you will always catch more fish, in both the long and short run, by extensive fishing. Since everyone will overuse this lake, it will be depleted, so the fishermen would be better off if they all fished at a low rather than high level. As with other prisoners’ dilemmas, however, game theory dooms the fisherman to take selfish actions that collectively make everyone worse off.

The tragedy of the commons manifests when no one has the right to exclude. If you owned the lake, it would be in your self-interest to ensure that enough fish survived to breed and replenish the stock.

The tragedy of the commons could also strike a commonly used secretary. Imagine one secretary has been assigned to five firm attorneys. Each attorney has high- and low-priority work to give the secretary. If nearly everyone gives the secretary all possible work, the secretary will become overburdened and unproductive. Consequently, the attorneys would collectively be better off if they all give their secretary just high priority work rather than giving both high and low priority work. Each attorney, individually, however, might always be better off giving the secretary all his work. Consequently prisoners’ dilemma and the tragedy of the commons doom the secretary to low productivity due to overwork. The solution to this secretarial dilemma is the same as to all tragedy of the commons: limit use. Someone needs to have the power to limit the secretary’s workload.

Internet Pricing

The tragedy of the commons afflicts fixed-fee Internet pricing plans. Many Internet users share a common network, so the more users on a network, the slower the network becomes. Consequently, one surfer’s viewing of graphic-rich pornography increases the time it takes another user to download pirated music.

When a user pays a fixed fee, the extra cost of spending another hour on-line is zero. Consequently, all users will download low priority materials, clogging up the Internet. All users on a common network might be better off if everyone limited their on-line time. Individually, however, users are better off spending as much time as they like on the net. When users pay per minute, however, this tragedy of the commons ends, for surfers now have an economic incentive to restrict their usage to high priority browsing.