Shortsighted or Selfish?

Suppose there is a shared resource, maybe a lake in your city where people could go fishing. And let’s suppose further that there are 10,000 people in the town and 8,000 fish in the lake. Doing the math, if each person were to go get one fish, next year the lake would be empty. But not everyone wants to go fishing. How can we manage this pooled resource for the benefit of all?

This problem is usually solved in practice by local government and scientists. For example, the Colorado Parks and Wildlife agency decides on limits for fishing per-person for those who buy a license. They also update the limits each year. Unfortunately, part of their management needs to be accounting for people who choose not to follow the rules. In fact, there is a well known economic theory called the “tragedy of the commons” which highlights that shared resources often are over-consumed.

You might wonder how people justify overusing a shared resource. It is also possible that you think the reasons are entirely obvious. One other possibility as I read the examples in the link, some of these issues might be unknown to the consumers. There is research about this phenomenon (the link above shares some example justifications too), but I thought in this post I would frame it more as an optimization problem.

Suppose you are deciding how many fish to personally pull from the lake. Each fish you take has some utility for you. If there are limits on fishing and you care about those limits, you may receive a negative utility for each fish past the limit. There would also be utility for obtaining fish in the future, though we generally have some reduced value to account for the time-value of money.  

If you were the only one taking fish from the lake, you would have an incentive to manage your consumption. But only if you value the future as well. If you own this lake today but intend to move somewhere else before next year, you might choose to consume as many fish as possible. As I learned in “engineering economics” we value a dollar today higher than a dollar tomorrow, and so there is always a finger on the scale of being short-sighted. Fortunately, there is also growth opportunity in the future to balance the focus on the present. Today we can only get the utility of the number of fish in the lake at this moment. Manage your future well and you can have a whole series of years of utility.

When the tragedy of the commons is at play though, there are many people depleting the resources. Suppose the people managing the pond said “there are 8,000 fish in the pond today. If we have 4,000 fish left at the end of the season, the population will recover to 8,000 again by next year.” So, they see who wants fishing licenses and discover there are 1000 people who plan to fish, so they tell each person to take up to 4 fish.

So you go, and you catch 4 fish. Except, surely some people will not actually take their share, and so it’s reasonable to catch 4 extra to make up for the person who surely decided not to use their license. What if you actually found one of those people and got their permission to catch their fish for them? Except, what if the wildlife management people were also planning on only half of the allocated fish being caught based on past patterns? So now you have adjusted for their adjustment and accidentally over-fished.

These issues are caused by a mix of uncertainty and soft constraints. There is some estimate that if there are roughly N fish at the end of the season, the population next year will fully recover. If there are four less than N, we consumers expect it will still more-or-less fully recover. We know that at some point that won’t be true, but everyone feels like their individual contribution is not the one that put things “over” so-to-speak. And it makes sense, I have a share of 4 fish out of 4000. 8 is still a drop in the bucket compared to the total.

Feel free to share your thoughts! If you are familiar with the tragedy of the commons, does anything I posted seem new or different? If this is a new topic for you, does it help to know that it’s a well-studied phenomenon?