The Tragedy of the Commons Is Not About Greed — It Is About Bad System Design
Why People Are Good, and Only Bad Measurements Make Them Do Bad Things
When people hear The Tragedy of the Commons, the dominant conclusion is almost automatic:
“People are greedy. If left alone, they will destroy shared resources.”
Dr. Yung-mei Tsai’s classroom simulation is often cited as proof of this belief. Students, acting rationally, over-harvest a shared resource until it collapses. The commons dies. Everyone loses.
But this conclusion is wrong — or at least dangerously incomplete.
The tragedy does not arise from greed.
It arises from how the system is designed, what is measured, and what is rewarded.
When viewed through the lens of the Theory of Constraints (TOC), Tsai’s simulation becomes powerful evidence of a very different truth:
People are fundamentally good. Systems that reward local optimization create destructive behavior.
What Actually Happens in the Simulation
In the simulation, each participant is allowed to take up to two items from a shared resource pool per round. The pool regenerates based on what remains. Early rounds forbid communication.
Most groups rapidly destroy the resource.
The usual interpretation:
Students are selfish
Individuals prioritize themselves
Cooperation is fragile
But observe more carefully what participants are actually doing.
Each player is:
Acting rationally
Responding to uncertainty
Protecting themselves from loss
Optimizing according to the rules and incentives provided
This is not moral failure.
This is logical behavior in a poorly designed system.
The Core Mistake: Confusing Local Success with Global Success
The real problem in the simulation is not human nature — it is local optimization.
Each participant is implicitly measured on:
“How many items did I collect this round?”
No one is measured on:
Total system output over time
Sustainability of the resource
Collective success
In TOC terms:
The system has a constraint (the regeneration capacity of the commons)
The players are not measured on protecting it
Therefore, they unknowingly destroy it
This is exactly what happens in organizations every day.
Why This Is Not Greed
Greed implies excess beyond rational need.
But in the simulation:
Players take more because not taking feels risky
Players fear others will take instead
Players respond to a measurement system that rewards immediate extraction
If greed were the cause, communication would not fix the problem.
Yet when communication is allowed:
Groups quickly self-organize
Fair rules emerge
The resource stabilizes
Everyone earns more over time
Greedy people do not suddenly stop being greedy.
Bad systems do stop producing bad outcomes when redesigned.
The Role of Measurement: The Real Villain
TOC teaches a simple but uncomfortable truth:
Tell me how you measure me, and I will tell you how I behave.
In the simulation:
Individuals are rewarded implicitly for short-term extraction
There is no penalty for system collapse
There is no metric for long-term throughput
This mirrors real-world KPIs:
Departmental efficiency
Individual bonuses
Utilization rates
Quarterly targets
Each looks reasonable in isolation.
Together, they destroy the system.
Global Goal vs. Local KPIs
The tragedy disappears the moment the system is redesigned so that:
The global goal is explicit
Individual actions are subordinated to that goal
The constraint is protected
Success is measured at the system level
When participants align around:
“Maximize total benefit over time for everyone”
Their behavior changes — without changing who they are.
This is the most important lesson of the simulation.
People Are Not the Problem
TOC insists on this principle:
Blaming people is lazy thinking. Improve the system.
The tragedy of the commons is not evidence that:
People are selfish
Cooperation is unnatural
Control is required
It is evidence that:
Poor measurements create destructive incentives
Local KPIs generate global failure
Systems shape behavior more powerfully than values
Why This Matters Beyond the Classroom
Organizations collapse commons every day:
Sales destroys operations
Cost cutting destroys throughput
Efficiency destroys flow
Bonuses destroy collaboration
Leaders then blame:
Culture
Attitude
Motivation
But the real cause is almost always the same:
We reward local optima and hope for global success.
Hope is not a strategy.
The Real Lesson of the Tragedy of the Commons
The tragedy is not inevitable.
It is designed.
And anything designed can be redesigned.
When systems:
Align measurements with the global goal
Protect the constraint
Reward collective success
People naturally behave in ways that look cooperative, ethical, and even generous.
Not because they changed —
but because the system finally allowed them to succeed together.