Overexploitation of Renewable Resources by Ancient Societies and the Role of Sunk-Cost Effects

Abstract

One of the most persistent mysteries in the history of humankind is the collapse of ancient societies. It is puzzling that societies reaching such high levels of development disappeared so suddenly. It has been argued that overexploitation of environmental resources has played a role in causing the collapse of such societies. In this paper we propose an explanation for the pattern that overexploitation seems more common in ancient societies that built larger structures. This explanation is based on the well-studied sunk-cost effect in human decision making: Decisions are often based on past investments rather than expected future returns. 2 This leads to a tendency not to abandon something (e.g., a settlement) if much has been invested in it, even if perspectives of the future are dim. Empirical examination suggests that sunk-cost effects leading to similar declines in resiliency are visible in the histories of several ancient societies. A stylized model is used to illustrate under which conditions collapse of societies can be expected. Finally, we discuss the consequences of these insights for current societies.

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