Of course we can use "moral hazard" but we can use "moral hazard" for many things. Tragedy of the commons is a moral hazard (maximize your utility before the rest of the public wises up). I want a greater degree of specificity, so I'm looking for a term that is comparable to tragedy of the commons (in other words I want it to sound legit and still be specific).

The situation is:

One group innovates, the others copy the first group. Importantly, the groups that copy reap similar rewards to the first group. The result is an environment that does not foster innovation.

I initially thought this was a type of tragedy of the commons but it's not what's being used up, it's about what never gets initiated and worked on.


Is there an economics term to describe this type of situation? Either macro or micro economic setting would work. (Note: it doesn't have to be about "innovation" per se, just this general mechanism that weighs on the first group because it knows other groups will copy.)

  • $\begingroup$ Freeloading might be the term $\endgroup$
    – dm63
    Commented Aug 30, 2023 at 11:21

2 Answers 2


If I understand it correctly, you are making these core assumptions:

  1. If nobody innovates, no profits are generated.

  2. Innovating pays off, but is costly.

  3. Copying pays off as well, and is not costly, but it needs an innovator to copy from.

The simplest model of this is a static normal form game: There are $n\ge 2$ groups. Each group can either choose $I$ (innovate) or $C$ (copy). Choosing $I$ has a constant payoff of $1$. Choosing $C$ has a payoff of $b>1$ if at least one group chooses $I$, but a payoff of $0$ if nobody chooses $I$.

This game is known as the Volunteer's Dilemma.

(BTW: Neither the Volunteer's Dilemma nor the Tragedy of the Commons are instances of moral hazard properly understood.)


I would call this the free-riders problem. wikipedia


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