Sunday, January 07, 2007

Follow the white rabbit

"The Tragedy of the Bunnies" is a simple game that illustrates an important concept commonly referred to as “The Tragedy of the Commons.”

Having a commons (publicly-owned property) sounds like a great idea, so why do stories about the commons – the ocean, rivers, and air – so often turn tragic? Why are so many species facing extinction? Why are so many resources being depleted? How do we avoid these tragedies? The following discussion explores some solutions. (...)

As any economist will tell you, people respond to incentives. If there's a valuable resource lying about in a commons—picture a pizza at a frat party—people will try and grab as much of that resource as they can before the resource is depleted. This response is natural—it's an example of people responding to incentives. In other words, in a zero-sum game, you need to "get while the getting is good". The more other people get, the less there is for you.

Even if the resource is renewable—like a forest or an elephant population—the situation can turn into a zero-sum game. This is because while it may be in the community's interest to refrain from depleting the resource, it's still in each individual's interest to "get while the getting is good." Tragically, the very people who do act in the long-term public interest and refrain from depleting the resource end up getting nothing. Even more tragically, when a renewable resource is utterly depleted, no one benefits over the long-term. This is the tragedy of the commons.

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