Coping with the Tragedy of the Commons: Game Structure and Design of Rules

Abstract.  The paper provides an assessment of some recent results of the large amount of New Institutional Economics analyses investigating a common-pool resource setting, with a specific focus on game theory models. Most of the studies have used a noncooperative approach in order to explain how under-provision for the resource or its over-use – the so-called Tragedy of the Commons – can be avoided, within given management rules. They show how the characteristics of the game (payoff matrix, repetition) or of the users (group size, wealth, heterogeneity and moral norms) may give incentives for the latter to play in a way that benefits all users. By contrast, much fewer articles have used a formalized approach to assess the possibility for players to design new rules to overcome the initial Tragedy of the Commons. The article ends with some proposals of directions for future research.