NPL 273  Introduction to Nonprofit Leadership


The Service Providers’Dilemma


The Tragedy of the Commons

Garret Hardin, in "The Tragedy of the Commons," (Science, 1968) tells a tale which underscores the importance of incomplete knowledge. In Medieval England, the yeoman farmers grazed their animals on a common field in the center of the village. Every farmer in the village had the right to graze all of his or her animals on this land, called the "Commons." In the sixteenth century, a technological advance in weaving began to destroy the Commons. A new type of loom permitted weavers, working in their homes, to produce high quality woolen fabric at a much greater rate than before. Yeoman farmers could weave wool from their own sheep at home and sell it for a good price on the export market, thus freeing themselves from subsistence farming. This encouraged farmers to graze increasingly larger flocks of sheep on the Commons. When the Commons was first established, most of the grazing was done by horses and cattle--cows and oxen--which nip the tips of the grass but leave the roots undisturbed. Sheep, on the other hand, eat the grass down to the roots; sheep pasture must be left fallow if it is to recover. The farmers, seeking the economi security of an outside income, overgrazed the Commons until it died. They lost their farming income as well as their weaving, since the draft animals lost their pasture along with the sheep.

There were probably few farmers who recognized the risks they (all) were running. But even supposing one of them recognized the danger before it was too late,what could s/he do? If one farmer refused to put more sheep on the Commons, it just left room for the others to put more on, and the self-sacrificing farmer would be left to face the coming crisis without the additional income that the last few sheep would have brought. Logic would only seem to push the farmers more quickly their common doom.

The logic of such public choices has been called the Prisoner's dilemma, after another story (Thomas Schelling, Micromotives and Macrobehavior, 1978). Suppose you are picked up and interrogated by the police. The detective informs you that they know you and your buddy have been burglarizing houses in the neighborhood, and they have enough evidence to send you both away for 3 years as it is. But they are particularly interested in closing the file on the job they suspect you two of having done last night. If you turn State's evidence and testify against your partner, you'll get off with 1 year (your partner will get 10 years). If you remain silent and your partner talks, the sentence will be reversed. If you both talk, then you'll probably go up for 7 years each. The table below illustrates their situation, with Prisoner A's choices across the top and Prisoner B's choices down the side. The first number of each pair represents A's outcome, the second is B's.

 

Talk

Silent

Talk

7/7

10/1

Silent

1/10

3/3

What do you do? Suppose you can trust your buddy not to squeal on you. Then if you stay silent you will spend the next 3 years in prison, but if you talk you can walk out in 1 year. Suppose your buddy does talk. Then if you stay silent you will spend the next 10 years in prison, while if you talk you only get 7 years. Clearly, either way you come out ahead by talking--the rational choice is to betray your partner. Since your partner is also rational, you can expect that both of you will talk. The result is that you will both go to prison for 7 years instead of the 3 years you would have gotten had you not been so"rational." This information, however, does not help; no matter what your partner chooses to do, your self-interest is best served by talking.

The model which underlies the Prisoner's Dilemma explains a great number of apparently irrational choices. It explains why the farmers overgrazed the Commons. It explains why landlords allow their buildings to turn into slums (Davis & Whinston, "The economics of urban renewal," Law and Contemporary Problems, 1961). It can explain why industries pollute watersheds and airsheds and why commuters persist in creating gridlock. It represents probably the single greatest challenge to making decisions in local government.

 

The Service Providers’ Dilemma

Each of your teams represents a nonprofit organization in the community. You are all involved in delivering similar services to your community. There are only so many volunteers in the community, only so much in charitable donations, only so much in government support, etc. Each round is one year, and you are trying to decide whether or not to hold a charity golf tournament each year. If you are the only one to do it, then you get lots of publicity and raise lots of funds, but if everyone does it, then there are too many tournaments and everybody ends up spending more volunteer time and money than they gain. On the other hand, if you are one of the few to decide to pass this year, you end up looking like you’re not doing anything and you lose money and volunteers. But if everyone chooses to pass, then you have all saved those resources that can be used for other things. So, what do you do?

The Play: Each person in your group (it is easiest if there are10 groups) represents an organization in the community. You must decide whether to hold a golf tournament fundraiser this year or not. You must make your decision in your group alone without colluding with the other organizations. In real life, there are too many of you to coordinate something like this, and besides it smells of collusion and deal-making.

Goal: Maximize Resource Gain

Cost of fundraiser: $20

Return from fundraiser (all teams earn same return):

% fundraising

$ gross receipts

10%

$30

20-40%*

$25

50-60%

$20

70%

$15

80-90%

$10

100%

$5

*holdouts lose $10 in community prestige

  1. The game will go for a total of 5 rounds (one round each day), beginning on Monday and ending on Friday. On each round, individual groups will select either “Y (Go)” or “N (no-go.” The decision is made by the group, and no discussion between groups is allowed (except as noted below).
  2. The decision about whether the group chooses N or Y may be based on any reasoning or logic, but a review of the point scoring system is recommended (remember, you are trying to “maximize resource gain”).
  3. Each group will e-mail their choice to me (tony@mnsu.edu ) by 9 AM each day. I will tally the results and post them back to each group via the Discussion Board.
  4. After the first 3 rounds, there will be a 30-minute period for open discussion by all groups together (in the Chat room—beginning at 1PM).
  5. After the 5th round, you will post to the Discussion Board your perceptions of what happened, why it happened, and what you learned from it.

 

Good luck!

 

 

 

 


The Analysis: Compare your group's performance to that of other groups in the class:

Summary Question

What do these activities tell you about the dynamics of organizational growth and decline in a community? Why are there “primadonnas”? Why isn't everyone a primadonna?


MSU

1998 A.J.Filipovitch
Revised 4 April 2008