Can economic games teach us about reducing the likelihood of Tragedy of the Commons?

The tragedy of the commons (TOC) is an environmental and economic theory, first described by William Forster Lloyd, and later brought to the public eye by Garrett Hardin. The logic behind this theory is premised on the accepted understanding of human nature being rational, self-interested beings. The ‘commons’ are defined as any shared resource, of which usage is unregulated, such as water, atmosphere/air, fish stocks, and space on earth. These resources are not, or cannot be, privately owned, thus are owned ‘in common’ by all members of society.
TOC states that due to all individuals acting independently and in self-interest, it is inevitable that shared resources will be overexploited, despite it being to the detriment of long-term interests. Lack of regulation and accountability means that individuals will continue to selfishly gain from exploiting the free rein, until the resource collapses because all other individuals are doing the same.
This theory has been applied to environmental economics, and is hugely significant in modern ecologism, as there is a plethora of examples where TOC has manifested: overfishing, causing population instability that the fish reproductive cycle is too slow to repair; pollution and resource monopolisation by private companies to the disadvantage of future humans. It would benefit of humanity to find methods of reducing the likelihood of TOC occurring.
The current consensus is that overcoming TOC requires sophisticated cerebral skills, such as reasoning, negotiation, and governing, but this opens the question of how non-human animals overcome the challenges of TOC. We don’t yet know how many species silently drive themselves extinct through individual-centred selection, or how often biological systems resolve/avert TOC. It has been suggested that methods including ‘policing’, kinship and diminishing returns can act as natural governance preventing TOC.
Economic games act as a thought-experiment microcosm of human and animal societies, allowing us to play out certain mechanisms with the aim of preventing TOC. I will now discuss how the use of game theory can aid our understanding of TOC in humans, and how this can be applied to both preventative measures, and our understanding of animals.

The Ultimatum Game (UG) is often referenced when trying to understand the psychology behind TOC. UG is most commonly played by two anonymous individuals being told they have to split a sum of money (usually £100). Player 1 suggests a split ratio, and player 2 either accepts or declines, if the split offer is declined by player 2, neither player get any of the money, therefore giving the ultimatum. The results of UG differ widely across cultures, suggesting that the societal view of ownership and sharing is likely a construct learned from nurture, rather than innate self-interested human nature. For instance, in America, the most common outcome of UG is to offer ~50, and turn down offers of 40 or below, implying the importance of fairness over everything else, as the majority of people would decline free money if it meant the other player would also not gain from means they deemed unfair. Whereas, when researchers tested UG in tribal communities in the Amazon, Asia, and central Africa, player 1 almost always offered a split which was very small to player 2, but player 2 almost never rejected the offer, because of how irrational it would seem to turn down any free money. These contrasting responses to UG show how powerful the belief of possession can be, as American culture is more ownership and competition centred, they would rather both parties lose, than someone receives more than them.
Seeing as the UG demonstrates that societal importance placed on ownership of resources can be learnt, which suggests the potential for teaching new priorities to societies with little care for shared commodities. If all societies placed fairness over personal gain, TOC may be less likely.
As TOC says that people will continue to exploit until there is nothing left, even if they are gaining only a small amount from this exploitation, it’s better than nothing; if this could be replaced by a system where each participant saw how much everyone else was taking from the resource, and demanded a fair split, then each individual would be forced to take less.
The UG does not directly apply to the animal kingdom, as acts of spite, where neither actor nor recipient gain from an interaction, are exceedingly rare in nature, meaning that player 2 would almost never turn down any split offers.

Zero-sum games are also used to understand TOC: these are when the sum of the amounts won by some players equal the combined losses of the others. These are described in biological terms by Daniel Rankin, who illustrates zero-sum with light competition in plants. The external/extrinsic resource (light) remains unchanged, but its distribution among the population leads to exploitation.
Taller plants gain more sunlight than those they outgrow, as they cause shade, meaning they are more successful at gathering this resource, but this comes at the cost of heavy investment in structural biomass. Additionally, being taller does not generally increase reproductivity, so this growth is reproductively wasteful, meaning tall plant populations, which similarly invest in an effectively zero-sum game, are less productive.
TOC is a zero-sum game, where the individuals gain from overexploiting a resource is causally linked to the disadvantage of the other individuals. To use Lloyd’s example, if a field is being used for grazing by a whole village, where each individual has one cow on the field, and then one individual sees that the field has the capacity to hold more cows, and buys 4 more, the rest of the villagers will be impacted directly from one persons overexploitation of a resource, as now their cows will have less grass, and will not thrive. Although the exploiter’s cows will also not thrive, because the resource is stretched thin, they will still gain 5x more economically than the other villagers, thus being a zero-sum game.
However, being zero-sum isn’t necessarily a deterrent and not incredibly helpful in preventing TOC, because chess and poker are both zero-sum and still some of the most popular games in the world, despite the huge potential loss. But it is important to note that the only universal solution for zero-sum games is to avoid participation or find equilibrium of outcomes, and to ask how likely it would be to achieve these in human societies.

A final economic game of significance was carried out by Milinski et al. and describes how the psychology of reputations and trust could be key in preventing TOC. This study ran through a complex game where people are given £5 each, and decide whether to contribute any of this to the ‘group fund’, which is then totalled, doubled, and redistributed equally. This was first carried out anonymously, but if identities of who contributed and who declined were revealed, other players almost never contributed to groups that contained an individual who did not share in previous rounds. This game study showed that reciprocal relationships and a trustworthy reputation were key in maintaining cooperation for public goods. Cooperating with common goods in this case is beneficial for all, due to the potential to gain double the amount of money, but individuals are unlikely to cooperate with others who have shown they are not fair. This study shows that TOC can be avoided if resources are productive, and reciprocal interactions can be beneficial.

The methods identified by Rankin that already exist in nature appear to be the most viable mechanisms to prevent TOC, as they already prove successful in other species. Examples include: kin selection (where it is not genetically beneficial to withhold shared resources from conspecifics), coercion/punishment (where the consequences of over-exploiting are more costly than beneficial, due to response from conspecifics – commonly seen in social insects, where exploitative worker eggs are often eaten), exploitation isn’t individually ideal (you personally gain more by restraining exploitative behaviours, than you would have gained from exploiting – seen in meerkats, where the most vigilant watchers/guards of the group gain most advantage, despite the temptation to ‘cheat’ and rest instead of watching), and the law of diminishing returns (gain from exploitation is often non-linear and non-random, as you exploit more, the resource is depleted further and further, meaning there is less to gain from its exploitation).
The mechanisms of punishment/penalties and diminishing returns seem to have great potential for human society, as ‘green taxes’ targeting companies that unsustainably pollute heavily, and can act as coercion and disincentive for damaging behaviour, and diminishing returns often acts most firmly on actors who cannot make full use of the surplus resources they have hoarded, for instance, giant mono-cultures owned by monopolising companies are increasingly costly to maintain as they grow, and produce less crops over time, as the soil quality is eroded by over-exploitation.
Overall, I believe that application economic game theory can be somewhat beneficial in testing preventative mechanisms TOC, but there are limits to the scope of this. Instead, we should learn what we can from systems active in nature, as animals seem more able to maintain resource equilibrium, thereby avoiding TOC.

Published by amyandkatherine

We are two friends of 12 years, trying to start careers in journalism.

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