The Tragedy of the Common Heating Bill

We leverage quasi-experimental variation to study how behavioral factors and group size influence free-riding in high-expense environments. Without apartment-specific heat meters, tenants use simple heuristics to split a common bill. We estimate that the staggered rollout of a corrective technology, "submetering," reduces average heating expenses by 17%. Machine learning uncovers substantial heterogeneity, consistent with strategic free-rider exit and coordination failures in large buildings. Tenants in smaller buildings barely respond. Survey evidence reveals widespread uncertainty about billing regimes, attenuating free-riding incentives and bounding effects. Still, submetering is welfare-enhancing for many buildings, especially after accounting for the social cost of carbon.