Surprisingly little research has quantified the severity of Wi-Fi congestion in densely populated areas. We performed a high-fidelity 3D simulation of the performance of a realistic Wi-Fi deployment in a typical apartment block. Our results show that congestion leads to significant loss of performance, and that current channel selection procedures have only little effect. Also the strategy that is mostly applied today, i.e. to deploy additional repeaters and access points (APs), fails. As this is a typical example of the “Tragedy of the Commons”, some form of collaboration between AP operators is needed to solve the problem. New channel selection algorithms that optimize Wi-Fi performance on a system level then become possible which, for instance, minimize the mutual interference impact on all APs involved. We validate that such an algorithm indeed leads to an optimized as well as fair assignment, which is a necessary first step towards solving the Tragedy.