Institutions Matter! Why the Herder Problem is Not a Prisoner's Dilemma

20 Pages Posted: 30 Mar 2008 Last revised: 29 Sep 2008

Daniel H. Cole

Indiana University Maurer School of Law; Indiana University School of Public and Environmental Affairs; Indiana University Bloomington - Workshop in Political Theory and Policy Analysis

Peter Z. Grossman

Butler University - College of Business Administration

Date Written: May 5, 2008

Abstract

In the game theory literature, Garrett Hardin's famous allegory of the tragedy of the commons has been modeled as a variant of the Prisoner's Dilemma, labeled the Herder Problem (or, sometimes, the Commons Dilemma). This brief paper argues that important differences in the institutional structures of the archetypal Prisoner's Dilemma and Herder Problem render the two games different in kind. Specifically, institutional impediments to communication and cooperation that ensure a dominant strategy of defection in the classic Prisoner's Dilemma are absent in the Herder Problem. Their absence does not ensure that players will achieve a welfare-enhancing, cooperative solution to the Herders Problem, but does create far more opportunity for players to alter the expected payoffs through cooperative arrangements. In a properly modeled Herder Problem, defection would not always be the dominant strategy. Consequently, the Herder Problem is not in the nature of a Prisoner's Dilemma.

Keywords: tragedy of the commons, prisoner's dilemma, game theory, herder problem, institutions, cooperation, communication, commons

JEL Classification: C7, D74, H41, K11, K12, K32, K42, Q15, Q22

Suggested Citation

Cole, Daniel H. and Grossman, Peter Z., Institutions Matter! Why the Herder Problem is Not a Prisoner's Dilemma (May 5, 2008). Available at SSRN: https://ssrn.com/abstract=1114541 or http://dx.doi.org/10.2139/ssrn.1114541

Daniel H. Cole (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

Indiana University School of Public and Environmental Affairs ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Indiana University Bloomington - Workshop in Political Theory and Policy Analysis ( email )

Indiana University Bloomington
Bloomington, IN
United States
(812) 855-4421 (Phone)

Peter Z. Grossman

Butler University - College of Business Administration ( email )

Indianapolis, IN 46208
United States
317-940-9727 (Phone)

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