Abstract for: Measurement versus Reporting: Levers to Improve Management of Commons

Management of common-pool resources (CPRs) relies on information prone to misperception associated with time intervals and delays inherent in measurement, reporting, analysis, and action. This paper explores the impact of information (mis)perception on economic systems that rely on CPR extraction. To this end, a "perceived commons availability" component is introduced to a classic "tragedy of the commons" model. This new component incorporates processes that measure, report, and analyze commons' availability and uses that information to make and implement decisions that manage the investments that consume resources. Results suggest that even with a perfectly responsive decision system, free of measurement errors, time lags in the measurement and reporting processes could create a systematic bias leading to a tragedy of the commons. We also find that in a system with declining resources, "reporting agility" (how fast reports are produced) has greater leverage than "measurement agility" (how frequent things are measured). The opposite occurs in a system with increasing resources, implying that in some circumstances regulators should implement flexible management systems that switch the priority between measurement and reporting agility.