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.

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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.

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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.

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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.

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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.

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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.

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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

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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.

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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.

The Curious Case of the Human Cattle Market

 

The Curious Case of the Human Cattle Market

You go down to the dating market these days, and it's a sight to behold. Folks standing around, holding up pieces of paper, like they're selling used cars. Or maybe, more accurately, like they are used cars. "One owner, low mileage, good on gas," or something like that. They list their features, their assets, their... specifications. It's a shopping mall, but instead of shoes and shirts, it's people.

Now, in the old days, say, the Middle Ages in England, if you were in the cattle market, you’d be looking for a good cow. A sturdy one, maybe a calf coming along, good for milk or meat or pulling a plow. You’d poke at it, check its teeth, maybe even give it a sniff. And if you liked it, you'd buy it. Simple as that. The cow didn't get to choose you.

But the dating market, oh no, that’s where it gets complicated. Because here, the cattle get to choose back. You might eye up a prize bull, thinking, "Now that's a fine specimen for my pasture." And then the bull looks at you, snorts, and trots off. Or maybe some scrawny little goat comes bleating around, all eager, and you think, "Nah, not my type." And so, you both stand there, the choosers and the chosen, doing a little dance of rejection until, lo and behold, you’re the last ones left. The "older stock," as it were.

Just the other day, I heard about this woman in Hangzhou. Thirty-four, apparently, which in dating market terms is practically ancient history. She spots this fellow, average-looking, about 5'9", nothing special on the outside. But then you peek at his spec sheet: "Annual salary 500k RMB, multiple properties in Hangzhou, studied in America, owns a luxury car." Well, now, that's a different story, isn't it? That's a prize bull in any market.

So, she goes up to him, all enthusiastic, which, I'm told, is unusual for women in these situations. "I'm a go-getter!" she practically shouts. "I’m 300k a year, two apartments, two cars, same height as you! It’s a match made in heaven!" She's practically salivating at the thought of all those apartments and the luxury car.

And what does he say? He crosses his arms, gives a little uncomfortable chuckle, and says, "Uh, I like 'em younger. '94 or later." Can you believe that? This woman is practically offering to bear him eight children – eight! – and he’s still saying no. Says he wants to have three kids, and apparently, a 34-year-old can’t handle that kind of reproductive output. My grandmother had five by the time she was 30, but what do I know?

She even offers to take him to dinner, drive him wherever he needs to go. "We're the strongest match!" she insists. "You'll regret it if I get married tomorrow!" Like she's a limited-time offer at the supermarket.

It’s just… baffling. In the cattle market, if you found a good cow, you took it. You didn't say, "Well, it's a fine cow, but I was hoping for one born in '94 or later, and this one's a '91." You’d just be happy to have a good, healthy cow.

But in the dating market, everyone's looking for something perfect, something that ticks every single box on their imaginary checklist. And then they wonder why they're still standing there, holding their "for sale" signs, while all the "perfect" people are off doing whatever perfect people do. Maybe they’re looking for their perfect match, too.

It makes you wonder, doesn't it? Maybe we should all just go back to the Middle Ages. At least then, you knew where you stood. Or, more accurately, where the cow stood.

Scarcity and Choices in Economics

 

Scarcity and Choices in Economics: A Journey Through Time

scarcity (not having enough of everything we want) and trade-offs (having to choose one thing and give up another) are the very heart of economics. The whole field grew from trying to understand these basic ideas.

Early Days: Just Not Enough

Before economics became a science, people just naturally understood that resources were limited.

• Ancient Thinkers (like Aristotle): They talked about managing homes and wealth, showing they knew resources weren't endless.
• Medieval Times (like Thomas Aquinas): They discussed "fair prices," which again hints at how to share limited goods justly.
• Mercantilists (16th-18th Century): These folks wanted their country to get as much gold as possible. They knew gold was scarce, so they pushed for more exports and fewer imports. This was a clear trade-off: more gold meant less of other goods from outside.

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Classic Thinkers: Facing Limits

The first true economists started looking at how societies deal with limited resources.

• Adam Smith (1700s): The "father of economics." He wrote about the "invisible hand" guiding markets. While he didn't use the word "scarcity," his ideas about dividing up work to make more goods showed he understood we need to make the most of what we have. It's about efficiently using limited resources.
• Thomas Malthus (Late 1700s): He famously worried that people would have too many babies, and food wouldn't keep up. This was a stark warning about scarcity leading to a terrible trade-off: more people meant less food per person.
• David Ricardo (Early 1800s): He gave us "comparative advantage." This idea says countries should make what they're best at, even if another country is better at everything. Why? Because resources are scarce, and by specializing, everyone can get more through trade. This perfectly shows how to make a trade-off (give up making some things) to gain more overall.

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The "Marginal" Revolution: Every Last Bit Counts

This was a huge turning point, making scarcity and trade-offs central.

• Jevons, Menger, Walras (Late 1800s): They came up with "marginal utility." This means how much extra happiness you get from one more unit of something. If something is scarce, that last bit is really valuable. Their work showed how individuals make choices, always weighing the value of one more unit against its cost – a classic trade-off for maximizing satisfaction.
• Alfred Marshall (Late 1800s/Early 1900s): He tied together supply and demand. Supply is limited (scarcity), and demand is about what people want (unlimited wants). He also clearly defined "opportunity cost": what you give up when you choose something else. This is the ultimate way to think about trade-offs.

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Modern Economics: Scarcity Everywhere

Today, scarcity and trade-offs are applied to almost everything.

• Keynes (Early 1900s): During the Great Depression, he showed that even with lots of workers available, they might be "scarce" if nobody was hiring. His ideas about government spending were a trade-off: spend money now to boost jobs, even if it means debt.
• Austrian School (Mises, Hayek - 20th Century): They argued that knowledge itself is scarce and spread out. So, central planning can't work because no single person knows everything. Markets, with their prices, help share this scarce information to make better trade-offs.
• Chicago School (Friedman, Becker - 20th Century): They applied economic thinking to almost everything, even family life and crime. They said people always make choices based on costs and benefits, even in non-money situations. For them, every choice is a trade-off involving scarce resources, even time.
• Public Choice (Buchanan - 20th Century): This group looked at how politicians and voters make choices. They argued that even in government, resources are scarce, and decisions involve trade-offs, just like in a market.
• Behavioral Economics (Kahneman, Tversky - 20th/21st Century): While they showed people aren't always perfectly rational, their research still revolves around how people make choices with limited resources (even limited brainpower) and the trade-offs they make.

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In short, scarcity and trade-offs are the bedrock of economics. Every economic idea, from ancient times to today, tries to understand how people and societies make choices when there's not enough of everything to go around.