The tragedy of the commons and socialization: Theory and policy

We revisit the Tragedy of the Commons in a dynamic overlapping generations economy populated of shepherds who decide how many sheep they let graze on a common parcel of land, while relying on different forms of rationality (Nash players and Kantian players). We examine the dynamics of moral behaviors and land congestion when the prevalence of different types evolves over time following a vertical/oblique socialization process à la Bisin and Verdier (2001). We study the impact of a quota and of a tax on the congestion of land, and we show that introducing a quota may, in some cases, reduce the proportion of Kantians, and worsen the Tragedy of the Commons with respect to the laissez-faire. Ignoring the dynamics of moral traits may lead governments to implement policies that make the Tragedy worse than at the laissez-faire, even though such policies would work well for a fixed population composition.