Abstract: Many analysts presume that the appropriators of a common-pool resource are trapped in a Hobbesian state of nature and cannot themselves create rules to counteract the perverse incentives they face in managing the resource. The logical consequence of this view is to recommend that an external authority—\"the\" government—take over the commons. But considerable empirical evidence from field and experimental settings holds that appropriators frequently do constitute and enforce their own rules, and that these rules work. Our research agenda is to develop a coherent understanding of the set of conditions that enhance or detract from self-organizing capabilities when individuals differ substantially from one another. For the sake of concreteness, this paper focuses on the asymmetry present in most irrigation systems between those who are physically near the source of water (the head-enders) and those who are physically distant from it (the tail-enders). This paper first explores the interaction between head-end and tail-end farmers, particularly their decisions about whether to devote resources to the upkeep of the irrigation system, and how bargaining between the parties can benefit all sides. Finally, we examine empirical evidence from a study of irrigation institutions in Nepal and discuss the broader practical significance of our findings.