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.