Economics and the Tragedy of the Commons
Summary
CollapseLearning Goals
The simulation helps students learn:
- How markets fail when goods are not priced.
- How a common property resource generates market failure.
- How other allocative mechanisms deal with market failure.
- The role of auctions in allocating a property right to use the common property.
- How distributive outcomes vary with different allocative mechanisms.
- Factors that influence the choice of which allocative mechanism to use.
- How to apply the results from managing one common property resource (a fishery) to a large number of current policy problems.
Context for Use
The example is appropriate for either a microeconomics principles course or a macroeconomics principles course that includes a section on markets and efficiency. It will be most useful to an instructor who uses a classroom experiment earlier in the course to show how market price is determined from reservation prices of buyers and sellers. The simulation is very easy to use and requires minimal instructor preparation. The simulation takes approximately 40 minutes when results are shown to students after each round. Each student needs his or her own computer connected to the internet or a computer in a school computer laboratory.
Description and Teaching Materials
The simulation is available on the Aplia web site. The cost of using the experiments and simulations on the Aplia website is $15 per student. The instructor sets up an experiment-only course, and students create their own logon information and pay Aplia directly. The $15 fee opens up all the experiments and simulations on the Aplia website, not just the single example discussed here. The set up for an experiment-only course as seen by an instructor is shown below.
Each student is a member of a community where everyone fishes for salmon or hunts rabbits. Each salmon gives 4 pounds of protein. Each rabbit gives 1 pound of protein. The supply of rabbits is infinite. The salmon population will not be sustainable if the salmon stock falls below a given level. Each student tries to get as much protein as possible.
The simulation consists of six rounds divided into 12 month periods with the following characteristics.
- Round 1: Free access
- Round 2: Free access
- Round 3: Annual lottery
- Round 4: Monthly lottery
- Round 5: Auction
- Round 6:Auction
The student instruction page explaining the rules for each round is shown below.
To see a screen cast of Round 1 for an actual macroeconomic principles course with 91 students, click on the link shown below.
Screen Cast of Tragedy of the Commons
Aplia also provides a Quick Start Guide (Acrobat (PDF) 316kB Sep9 09) for instructors. The Quick Start Guide shows the screen shots that are available to show to students after each round. The results screens show students the range of bidding for the auction rounds and the distributional information for every round. The results screens can shown to students after each round.
TIME REQUIREMENTS:
Instructor preparation: One hour
Class preparation: 30 minutes
Class simulation: 50 minutes
Teaching Notes and Tips
The result screens can be shown to students when the results of the simulation are discussed in class. The link between the distribution of protein and the institutional mechanism implemented in each round is very clear. The bidding process of the auction mechanism is also very clearly shown to assign a value to protein.
The simulation can be related to several current policy issues and usually leads to a robust class discussion about the role of government in the economy when markets fail to price some benefit or cost. Current cap-and-trade issues are particularly relevant to the auction process in the simulation. The following web sites are a treasure trove of information for relevant policy issues: The Brookings Institution, The American Enterprise Institute, and The Cato Institute.
Assessment
Students do a pre-simulation assignment and a post-simulation assignment, in addition to the actual simulation. The instructor can edit or add to the pre and post assignments. For more information about assessment, see the SERC assessment module.
References and Resources
Harden, G. (1968) Tragedy of the Commons. Science 162(3859), 1243-1248.
"Tragedy of the Commons?" and Beyond A web resource of Science presenting the original article and the subsequent discussions in Science related to the original article. A must stop for any instructor using or making reference to the original article.