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Extending the bounded rationality concept can help overcome the tragedy of the commons: arguments from psychology, behavioral and institutional economics

Governance
Institutions
Decision Making
Martin Beckenkamp
Peter Vohle
University of Münster

Abstract

Looking at climate, plastic waste, epidemics: The tragedy of the commons is omnipresent in frightening global problems - solutions urgently need to be found. But how can we get out of this trap? Ostrom's IADF allows us to identify such social dilemmas via the analysis of physical and material conditions, where rational behavior in the sense of homo economicus inevitably leads to disaster. The psychological view of human intelligence is also under criticism. Sternberg (in press) argues that we are using a fatally flawed, outdated concept of intelligence that accelerates climate change, pollution, the use of weapons and inequality. It seems appropriate to overcome such concepts of rationality and intelligence by concepts that are more in line with the actual behavior of actors and can help to better manage social dilemmas. Solutions to social dilemmas may have been crucial in human evolution. It seems that mechanisms inherent in human nature can help to overcome intelligent egocentric behavior. To "win" in social dilemmas in the long run, we needed cooperation based on sustained trust in each other - e.g. no Inuit could catch a whale alone. There may be good reasons why, as evolutionary psychologists argue (Krasnow et al. 2015), we have evolved (irrational) "punishment feelings", that is, we are willing to punish people who do defect in case of cooperation-agreements or norms. Furthermore, Frank (1988) argues that the identification of trustworthy actors is possible by making use of nonverbal features developed in evolution that are difficult to fake. Seemingly irrational behavior trusting in mutual cooperation can thus become rational and dominant strategy. However, these mechanisms only work in small tribal-like groups. In large groups or societies, solutions to Social Dilemmas require Institutions (SDI) with monitoring, control and sanctioning (cf. Ostrom's design principles). However, reactance to institutions is the rule, undermining the goals of SDIs. This is one reason why Ostrom preferred self-governance. But in terms of global problems: What about (non-self) governance? Can the acceptance of institutions be increased? Some principles based on empirical results could be helpful to overcome reactance to SDIs: (1) Understanding that there is a social dilemma: the insight into the possibility of bigger cakes via (vulnerable) cooperation; (2) Experience of the consequences of mutual defection. The insight, that the bigger cakes may be eaten up by egoists, and that institutions prevent that. In that case, emotions can clearly be an adaptive (and rational) element in resolving social dilemmas and useful in maintaining SDIs, particularly in view of heterogeneity. In every culture there are - in varying proportions - egoists and cooperators. SDIs should support cooperators and prevent egoists from eating up the (vulnerable) pie. Thus, SDIs play an important role in securing trust between the stakeholders of commons. Comprehensible punishment of egoists and trustworthy support of cooperators helps SDIs to work sustainably.