One early example of the tragedy of the commons occurred in the Middle Ages. Sheepherders would graze their sheep on a common pasture. Each herder wanted to feed his or her sheep so that they could get fat and therefore be sold for a higher price. But the more sheep there were on the common, the less grass there was for any single sheep.

As a group, it would be better to limit the number of sheep on the common to maintain the resource. But each herder has an incentive to raise more sheep if the other herders are restricting the number of sheep they raise. Therefore, there is a conflict between what is collectively rational and what is individually rational. Let$$s look at a simple problem to see how this comes about.