Runge Reading

(Ctools) Runge, C. Ford, “Common Property and Collective Action in Economic Development” pp. 21-27, in Bromley, ed. Making the Commons Work: Theory, Practice, and Policy, 1992.

This article introduces “the free rider problem” and introduces prisoners dilemma. It then discusses the use of the prisoners dilemma schema to analyze private vs. cooperative grazing. Runge then discusses the Multiple prisoner’s dilemma and its role in common property.

  • common property - explore contemporary problems of common property resource management in developing countries
  • “the free rider problem”, individual puts responsibility on group or community
  • a.k.a. tragedy of the commons - each persons incentive to free ride regardless of the expected actions of others
  • some argue a possible solution is to internalize costs by making public assets private ex. cattle grazing
  • prisoners dilemma - collective decisions produce suboptimal outcomes
  • Multiple prisoner’s dilemma (MPD) - characterized by n agents, each with the same binary choice and payoffs
    • k - minimum number in group that can make positive gains for cooperating even though others did not
    • n - number of individuals
    • when k=n, no one gains from cooperation unless it is universal and there are no free riders
    • k<n, some free riders can be tolerated and they will benefit more than cooperators
  • In MPD for common property - each individual has incentive to free ride and graze heavily, causing overexploiting
  • According to Hardin, all individuals will choose to default and overexploit due to:
    • inferior outcome - led towards a noncooperative equilibrium
    • strict dominance of individual free-rider strategy - defecting is the dominant strategy
    • need for enforcement - cooperation is unstable which lead to the need for this
  • Need for incentives to keep agreements about common property
  • Key difficulties:
    • dominant free-rider behavior leaves no room for cooperation unless rules are in place and enforced from an outside source
    • dominant strategy mechanism fails to capture interdependence of decisions in village economy
    • mechanism fails to deal with problem of uncertainty regarding the actions of others