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The tragedy of the commons works like this: If everyone follows their self interest and goes fishing in the lake, pretty soon all of the fish will be gone and i
by GavinB 17y ago
The tragedy of the commons works like this: If everyone follows their self interest and goes fishing in the lake, pretty soon all of the fish will be gone and it will take decades for them to repopulate. If you somehow (how to do it is a coordination problem) arrange for only a small number of people to fish, they can bring in reasonable number of fish every day for many years.
The upshot: In some markets, like consumer electronics, supply and demand regulates things very efficiently. In others, unconstrained individual interest can ruin everything.
In the financial markets, individuals acting rationally for themselves can cause damage to the overall economy: crashes, bubbles, bank runs, etc.
- jamesbritt 17y ago" If everyone follows their self interest and goes fishing in the lake, pretty soon all of the fish will be gone and it will take decades for them to repopulate. " Or, everyone follows their self interest and realizes that they will need to work out some agreements to moderate fishing or there will be no fish.
- jibiki 17y ago> Or, everyone follows their self interest and realizes that they will need to work out some agreements to moderate fishing or there will be no fish. This can have downsides, namely the sort of "credentialism" that's often derided on this site (licensing for interior decorators, etc.) All the players in some industry decide that it's in their best interest to appeal for regulation which will prevent others from entering this industry.
- jamesbritt 17y agoOh, absolutely. I just don't buy the idea that the default expected behavior from people is to shot themselves in the foot so blindly (e.g., a race to see who can empty the lake first). That people may slowly stab themselves in the foot repeatedly is more likely.
- GavinB 17y agoThere are many different ways to deal with coordination problems, both public regulation and private arrangements. The overfishing problem isn't a hypothetical example, it's a real problem that has caused problems all over the world. http://en.wikipedia.org/wiki/Overfishing#Instances_of_overfishing http://en.wikipedia.org/wiki/Overfishing#Instances_of_overfi... The problem is that even if 90% of the fishers in an area are responsible, the remaining 10% can ruin it for everyone. And no one has any incentive, other than their conscience, to cooperate. And that's why it's a tricky problem.