Tragedy of Commons or Self-Management

In short, Tragedy of Commons refers to over usage of property or resource that is not owned by any individual. E.g., software code that is in a common repository, and anyone can modify it and utilize it. Why this happens is that each appropriator (user of common resource) wants to maximize their gain or short term advantage and starts overusing/misusing the shared resource, which leads to depletion or erosion of the commonly used resource. In the software domain, the source code becomes unmaintainable since each individual is making short cuts that suit only his short term goals.

The traditional solution to avoid TC is to have a government/management to appoint controllers or managers to the property to prevent miss-usage by individuals. This leads to many problems, e.g., how well the outside controller can observe the usage and how fair his judgments are. If his judgments are less than 75% accurate, then the best option for appropriators is to try overuse the resource according to Elinor Ostrom’s analysis using game theory. Another solution is to split the common supply, so individuals own it. In software, a common solution is to assign individual source code parts for individuals or small teams, which leads to problems that are presented in this video.

Avoiding Tragedy of Commons

Common Belief is that the TC is unavoidable. Still, the work of Nobel Prize winner Elinor Ostrom showed in her study, that much more beneficial and sustainable way governing the commons is using self-management than outside controllers. The critical difference with self-managing compared to the external controller is that the group self defines rules and monitors that the rules are followed. In her study, she showed how many groups have governed the commons using commonly agreed rules over centuries successfully.

The commonalities of the rules she condensed in 8 points that enable self-management of commons.

• clear defined boundaries of the commons, clear group identity of those using it, & effective exclusion of un-entitled parties
• proportional benefits & costs
  • typical case: members of the group must negotiate a system that proportionally rewards members for their contributions
  • edge case: high status or other disproportionate benefits must be earned through unique contribution
  • unfair inequality poisons collective efforts
• collective-choice arrangements
  • the group — those affected by the arrangements (“rules”) — can participate in creating the rules; not outside-imposed rules
  • they decide the arrangements by consensus
• monitoring agreed-upon behaviors
  • warning: managing a commons is vulnerable to free-riding & exploitation
  • unless undermining strategies can be detected at relatively low cost by norm-abiding members of the group, the tragedy of the commons will occur
• graduated sanctions
  • ”friendly social pressure” is often sufficient to start, but more severe forms of punishment must exist
• fast/simple & fair conflict-resolution mechanisms
• local autonomy, authorized
  • the group must have authority to decide & conduct their own affairs
  • related to principle 3 (collective-choice arrangements), here emphasizing the formal authorization by a higher-level party (e.g., a government) of legitimate local autonomy
• for groups that are part of larger groups, there must be appropriate coordination
  • every sphere of activity has an optimal scale; e.g., a federal government probably shouldn’t manage a small pasture
  • polycentric governance: large-scale governance requires finding the optimal size (and related optimal group) for each sphere of activity, & appropriately coordinating
  • subsidiarity: assign governance tasks by default to the lowest jurisdiction, unless explicitly determined to be ineffective among peer and tiered groups, with polycentric governance and subsidiarity

In the product development organization, what are the commons that can be governed using self-management?

• Source code/software
• Working practices
• Salary / Bonuses
• Customer base built by the collective marketing & sales, and potentially abused by the super seller

This is hopefully first post in series of posts digging deeper in how common resources can be managed using self-managing teams and groups.