Tragedy of the commons 
“For that which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual. For besides other considerations, everybody is more inclined to neglect the duty which he expects another to fulfill; as in families many attendants are often less useful than a few.”
—Aristotle (384-322 BC)

Many people understand that condominium living faces the economic reality that all owners want to live in a clean, well maintained property that enjoys continuous appreciation in property values. However many owners do not want to pay for it.

There are several economic theories that study the dilemma of the shirking of common responsibility in favour of private gain. They include:

Tragedy of the commons
In economics, the Tragedy of the Commons  (such as the condo's common elements) is the deterioration of shared resources by individuals, acting independently and rationally according to each one's self-interest, despite their knowing that depleting the common elements is contrary to their long-term best interests.
This theory helps explain why owners resist paying into the reserve funds, especially those who do not plan to keep their units for long and owners who are on fixed low incomes.

As a result, the hallway carpets become badly worn, burnt out light bulbs take a long time to be replaced and leaks in the parking garage are ignored.

Many individual units may be beautifully furnished but as soon as the residents walk out their front door onto the common areas, they enter a depressing environment.

Unenlightened self-interest
This is where a person ignores the needs of the group whenever he feels that by doing so, he will gain.

This is why, in order to keep the monthly fees low, amenities that are used by a minority, such as swimming pools, hot tubs, hobby rooms or badminton courts, may be closed.


Exclusive use balcony enclosed with chain-link fencing

Diner's dilemma
This is where six people decide to go out for dinner and that they will split the bill equally six ways. The person who orders the most expensive meal is partially subsidized by the other five while the person who orders the cheapest meal subsidizes the five others.

In condos this is the problem faced when all utilities are included in the monthly fees. Because everyone else will subsidize heavy consumption of electricity, some people leave the lights on when they leave the room and will not fix a leaky tap or a running toilet.

Free rider
This describes the people who will use public or common amenities but do not pay for their upkeep. A person who boards a public bus without paying the fare is an example.

In condominiums it is someone who is in arrears with their common element fees for 30 to 60 days, paying just before their units will be liened. In a few condos they just stop paying altogether if the board does not lien units.

Others may use a storage locker or a second parking space but not pay the required monthly fees.

Somebody else's problem
The diffusion of responsibility and/or the bystander effect may release individuals from the need to act, and if no-one from the group is seen to act, each individual may be further inhibited by conformity.

This explains why residents may ignore teenagers hanging around the staircases, drug dealing in the parking garage, excessive noise from weekend parties and cigarette butts being thrown off the balconies.


Garbage bags left outside a condo building

Race to the bottom
Low condo fees are an important selling feature. Within a neighbourhood, condos may see the need to compete for potential buyers by insuring that their common element fees are lower than all the other condominiums in the area.

The pressure to keep the fees low puts stress on the condo's budget and so the building begins to slowly deteriorate.
 
The market for lemons
A lemon is an American slang term for a car that is found to be defective only after it has been bought.

According to this theory, since it is difficult for a condo buyer to determine the quality of an apartment building's machinery, mechanical components and structural soundness, they need to hire a competent building inspector to give them the needed information or they will reduce their asking price to adjust for these uncertainties.

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