Hi, in this last lecture on prisoner's dilemma problem and common pool resource

problem, I want to talk about why the particulars matter so much, why we think

about real institutions and real incentive systems that can solve these problems. We

have to care a lot about the real features of the world. So, now let me talk about

collective action problems. These were things like it's in mine incentives to

burn lots of carbon fuels. But collective, we've be better off if we burn fewer. And

then we've talk about common pool resource problems like managing cod and

managing forest where we want to not over harvest or over fish. And we also like to

add [inaudible] dilemmas were I'm better off. Defecting but collectively we'd like

to cooperate. Now when we look at these things, we can write down mathematical

equation. We can say here's the canonical collective action problem, and we can

think about desi-, describing some sort of mechanism, or some sort of institution

that will solve these. But when we think about real world cases, there's a lot

that's missing from this just simple mathematics. So, we're just saying X I be

some action in zero one. And it leaves out a lot of features of the real world. So,

what I wanna talk about is when we think about something like a collective action

problem or a common pool resource problem, which we've gotten mathematically

represented down here as. >> Do we need to know more, do we need to know more than

just the simple model? And the answer is, we do. Now the model again is gonna be

really useful as a benchmark, as a way for us to understand the problem. And then by

looking at the features of the real world, we can figure out how to under, how to

overcome the problem, that the model has represented to us in a clear way. Cuz

what's going on here in the collective action problem is we want to make sure

that people are gonna contribute in some way. In the common pool resource problem,

What we want to do is we want to make sure people aren't going to over harvest,

aren't going to over fish. So we've got to think about, now that we know the

problem based on the model, how do we apply this to the real world. >> Now

again, this is Elanor Ostrom I mentioned in the first lecture in this section. And

Elanor won the Nobel Prize in economics, even though she is a political scientist,

by basically showing all the different ways people have tried to overcome common

pool resource problems and collective action problems around the world by

focusing on the particulars. So let's take a moment to see why those particulars

matter. Let's take the case of cattle grazing on a common. This is a standard,

you know, common pool resource problem. There's a common as grass, and if your

cattle graze too much, there won't be other grass for other cattle to graze on.

And eventually you might just rip all the sod entirely, and there'd be no grass left

at all, and everyone would, all the cattle would die. So how do you overcome this?

Well, the problem is overgrazing. So how might you do it? You can think reputation,

kin selection, group selection; those may not be the right thing. So, instead, what

you might think is, let's create a rotation scheme. So, let's say, on Monday.

This person gets to have their cattle on the commons and on Tuesday another person

gets to and so on, so you might have some sort of rotation scheme. Now you can

enforce that rotation scheme by tagging the cattle. So each cattle might have

brands and so for you could tell, who's cattle were on the common and who's

weren't. Some were for sheep. So by branding and rotating, you can solve the

problem. And if things start to get bad, if you notice, like well the grass seems a

little bit low, then you can pull back a little bit and have fewer cattle grazing.

If there seems to be abundant grass, then you can actually let more people graze.

So, again, rotation scheme, branding, that would seem to work. What about lobster

fishing? This is another common tourist's problem. You got big set of lobster and

you might think of, okay, let's do this same thing. Let's have a rotation scheme

or some people can fish on Mondays, some people can fish on Tuesdays and so on or

maybe people can fish on different parts of the ocean along the coast, And you

might that would solve it. There's a fundamental [inaudible]. There's a

difference between cattle grazing on a comment and Harvesting lobster. And that

is that, in the cattle case, you know how much grass has been eaten, so you have a

sense of what the value of the resource is, or how much of the resource is left,

And if there's an abundance, you can put more cattle on, if there's not, you can

pull back. In the lobster fishing case, that may not be true. Because the, the

harvest anyone person gets is a random variable. And so people may not know

what's happening with the overall population. So therefore you need other

mechanisms to figure out exactly what is the population size, how much are people

catching? And from those other mechanisms, then figure out how much is being caught,

then you can decide how much people get to fish and how many lobster they get to

catch. So, you know, other mechanisms to monitor The total population of lobster

that you don't need in the case of cattle grazing on the commons. Let's take a third

example, drawing water from a stream, The thing about people drawing water from a

stream, let's suppose that stream runs down this way, and let's put one person up here, and

the streams moving this way, and other people down here. This problem is now

asymmetric, because this person who is at the head of the stream, they can draw

water out, and it affects everybody down here. This person at the end of the

stream, when they draw water out, assuming there's some water for them to draw, it

doesn't affect anybody upstream. So when you think about the mechanisms you need to

induce in this setting you gotta focus a lot more attention on this person than you do on this

person, because the person at the head of the stream has a larger influence than

people downstream [inaudible]. So, again, not quite the same as just rotating cattle

on the common, and also, not the same as harvesting lobster. So, the particulars

matter. In each one of these cases, Hence Ostrom says no panacea. So what we've seen

in this simple lecture is that we can write down these mathematical models and

say, here's a collective action problem, here's a common pool resource problem,

here's a prisoner's dilemma. And by bringing that model to bear in a real life

situation, we identify the nature of the problem. Once we've identified the nature

of the problem, then we can use our expertise at a particular situation,

embrace the particulars, take thicker descriptions of what's going on and then

construct institutions and incentives that help us solve those problems. Overcome the

collective action problem; solve the common pool resource problem, get

cooperation in the prisoner's dilemma. All right, thank you.