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

One of the most persistent mysteries in the history of humankind is the collapse of ancient societies. It is puzzling that societies that achieved such high levels of development disappeared so suddenly. It has been argued that overexploitation of environmental resources played a role in the collapse of such societies. In this paper, we propose an explanation why 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. This leads to an unwillingness to abandon something (e. g., a settlement) if a great deal has been invested in it, even if future prospects are dim. Empirical study suggests that there are indications of sunk-cost effects in the histories of several ancient societies. A stylized model is used to illustrate under which conditions societal collapse may be expected. Finally, we discuss the consequences of these insights for current societies