Tragedy Of The Commons

AAA

DEFINITION of 'Tragedy Of The Commons'

An economic problem in which every individual tries to reap the greatest benefit from a given resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits. Generally, the resource of interest is easily available to all individuals.

INVESTOPEDIA EXPLAINS 'Tragedy Of The Commons'

The tragedy of the commons occurs when individuals neglect the well-being of society (or the group) in the pursuit of personal gain. For example, if neighboring farmers increase the number of their own sheep living on a common block of land, eventually the land will become depleted and not be able to support the sheep, which is detrimental to all.

RELATED TERMS
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s ...
  2. Public-Private Partnerships

    A business relationship between a private-sector company and ...
  3. Resource Curse

    A paradoxical situation in which countries with an abundance ...
  4. Private Good

    A product that must be purchased in order to be consumed, and ...
  5. Public Good

    A product that one individual can consume without reducing its ...
  6. Iterated Prisoner's Dilemma

    A normal prisoner's dilemma played repeatedly by the same participants. ...
Related Articles
  1. 4 History-Making Wall Street Crooks
    Personal Finance

    4 History-Making Wall Street Crooks

  2. Tales From Wall Street's Crypt
    Bonds & Fixed Income

    Tales From Wall Street's Crypt

  3. The Importance Of Trading Psychology ...
    Options & Futures

    The Importance Of Trading Psychology ...

  4. The Financial Markets: When Fear And ...
    Active Trading

    The Financial Markets: When Fear And ...

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center