Common Resource Experiment: Simulating Tragedy of the Commons in a Classroom
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This experimental activity is based on the research experiments conducted in 2009 and provides a simple introduction into the problem of the Tragedy of the Commons (Hardin, 1968), allowing the instructor to illustrate how a group of rational individual agents will end up using a resource to a larger extent that would have been optimal from the point of view of a society. If needed the second part of this activity can present students with ways of solving the commons problem without government regulation.
In this activity each student is endowed with 15 hours of labor and has to allocate this labor between fishing and construction. Construction provides a guaranteed (but low) payoff. The payoff from fishing depends on the number of hours this person as well as other people spent fishing, and is higher than the one from construction, thus creating the incentive to overfish. The production functions can be easily modified for varying number of students in the class. The social optimum occurs when everyone limits their effort to 2/3 of the available time, but in reality people will end up spending their entire time fishing. This will illustrate the tragedy of the commons and conflict of common and individual interests. The second session (day 2) will allow students to talk to each other before making their fishing decisions thus showing how communication can help solve the problem of the commons.
- introduce students to the tragedy of the commons
- illustrate conflicts between individual and social optimum
- illustrate potential solution
- show possible application of Coase theorem
- make students think about other potential ways of addressing the problem.
Context for Use
Environmental economics or Principles of Economics courses. Also potentially public policy courses as well as behavioral economics classes. Depending on the course level more or less information can be brought into the discussion as needed.
Description and Teaching Materials
Students will need to be provided experimental instructions, and well as decision sheets. The instructor will need a simple Excel worksheet to enter individual students' decisions and calculate the resulting outcomes. Also students will need simple decision sheets that they can use to record their decisions as well as outcomes of particular rounds. Examples of materials will be provided later.
Teaching Notes and Tips
It is a good idea to deliver instructions to the students a day before the first day this activity is run. This way there will be no time spent in class reading the instructions. Also, a small reward (monetary or extra credit) can be offered for "making the most money." In this case there will be an incentive forr studednts to take it seriously and behave in a manner consistent with expectations.
Part of assessment will be happening as the results are collected. This will allow the instructor to present them to the students and have a discussion of what was happening in the situation, how the students were learning what the optimal policy was, etc. If a group was able to come up with some kind of a policy as a result of communication, the instructor will be able to see whether the individuals were following the agreement, etc. A good assignment for this project will be writing a 2-3 page essay asking students to comment on their behavior, the behavior of the others, find explanations for the types of behavior observed, and potentially provide suggestions of alternative policies aimed at solving the tragedy of the commons.
References and Resources
Research articles on experimental commons