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s4h-economics-coordination

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Diagnoses collective action failures, public goods problems, and why individually rational behaviour produces collective irrationality. Triggers: 'collective action problem', 'tragedy of the commons', 'free rider', 'everyone is acting in their own interest but the result is bad for all', 'why won't people contribute', 'public good', 'how do we get people to cooperate', 'commons', any situation where individual rationality produces group-level harm.

skills/s4h-economics-coordination/SKILL.md

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# Economics: Coordination Failure

Elinor Ostrom won the 2009 Nobel Prize for demonstrating what policymakers and economists had missed for decades: the tragedy of the commons is not inevitable. Communities have developed institutions — rules, monitoring, graduated sanctions, conflict resolution mechanisms — that manage shared resources sustainably without either privatisation or government control. But to solve the problem, you first have to diagnose it correctly.

The tragedy of the commons, formalised by Garrett Hardin in 1968, is a special case of a broader phenomenon: coordination failure. The general structure is this — when the benefits of an action are diffuse (shared by many) and the costs are borne by the individual, rational actors will undercontribute to the collective good. When the benefits of a bad action are private and the costs are shared, rational actors will overuse the commons. Individually rational. Collectively catastrophic.

This manifests in four overlapping problem types:
1. **Public goods problems**: non-excludable, non-rival goods (clean air, public safety, open-source software) are underproduced because producers cannot capture the benefit — free riders consume without contributing.
2. **Common pool resource problems**: depletable shared resources (fisheries, groundwater, shared codebases) are overused because the individual captures the full benefit of taking but shares the cost of depletion with everyone.
3. **Assurance games**: everyone would prefer to cooperate, but only if enough others do too. If you're not sure others will cooperate, defecting is rational — and this suspicion can make cooperation collapse even when everyone prefers it.
4. **Coordination games**: multiple equilibria exist and parties need to agree on which one to use, but have no mechanism to communicate and commit.

Ostrom's institutional analysis provides the solution toolkit. The goal of this skill is to correctly identify which problem type is present — they have different structures and require different solutions.
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