14 Sep 2008

Institutional Inertia

In this short paper, the author discusses the role of institutions in the social management of natural resources, i.e.,
A number of scholars have used game theory to explain the power of institutions to resolve problems plaguing the commons. However, the game theory used thus far does not take into account that how we value the commons is subject to change. Using conventional game theory to describe the power of institutions to govern the commons, the article extends that theory and highlights a dark side of institutions.


Values often collide in the commons. Should we protect owl habitat or employ local loggers to cut down trees? Do we keep our rivers free flowing or dam them for drinking water, to produce electricity, or for recreation? What should be done with the Arctic National Wildlife Refuge? The number of competing pressures vying for the commons within our forests, cityscapes, radio spectrum, and even global atmosphere highlight such tensions.

When institutions give a particular vision of the commons a privileged place, we may later come to regret it because our institutions lag behind our changing values, and sometimes painfully so. Stable institutions thwart emerging values in the commons by allowing a particular group with a particular vision of why a commons has value to hold it hostage to the detriment of other groups with competing visions of the commons. When values change, commons users seem more like commons cartels, and stable institutions look more and more like tragic institutions—an institution that systematically undermines rival values.
Bottom Line: Many institutions for managing water were established in a different era, an era when we had different preferences for the way water is used [I discuss this in my dissertation]. Now that times have changed (and many say they have), those institutions delay, rather than facilitate, change from a present use to a newer, more beneficial use.


  1. One could argue that institutions are set up to explicitly support the status quo. Some body of knowledge has been created and the institution is the way it is preserved and passed on to the future.

    Of course there is also the personal threat to one's career. I used to interview lots of older programmers who were experts in COBOL when the world had moved on to mini-computers and "C". Firms find it easy to hire the younger workers who know the new skills and junk the older ones.

    You work for an institution dedicated to promoting an obsolete, non-functional ideology yourself (wink!).

  2. "institution dedicated to promoting an obsolete, non-functional ideology yourself"

    I'm guessing that UC Berkeley has more than one ideology. Or did you mean economics (which also has many ideologies...)?

  3. I was referring to Mercatus, but I see you are now back at the mother ship.

    I hope Berkeley is open to more viewpoints that some other institutions that I could name.


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