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Day2-CollectiveActionProblems.pptx

Why Governments? The Problems of Collective Action

Matthew N. Beckmann

Housekeeping

beckmann.rocketmix.com

Password: vote20

Rocketmix modules due before lecture.

Section Attendance Required – starting next week.

Rocketmix Grading

1/3rd Did you do it? (1 or 0)

1/3rd Was it completed on time? (1 or 0)

1/3rd How well did you do (0-1)

- only on assessment Qs, 1st try, overall, curved

Outline

I. Introduction

II. The Problems of Collective Action

1. Coordination Problems

2. Free-Rider Problems

3. Tragedy of the Commons Problems

III. What’s the “Problem?”

IV. What’s the Solution?

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Ice for Katrina Victims

Mark Kostinec, was dropping a load of beef in Ohio on Sept. 2 when he received an urgent government job: Pick up 20 tons of ice in Greenville, Pa. and take it to Carthage, Mo., a FEMA staging area…

But at Carthage he was told to take his 2,000 bags of ice on to Montgomery, Ala…

After a day and a half in Montgomery, he was sent to Mississippi.

On Sept. 8, he was waved onward to Selma, Ala…

And after two days in Selma he was redirected to Emporia, Va…

He ended up unloading the ice into storage.

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10 folks, 1 boat.

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10 folks, 1 boat.

How much effort you give is up to you.

If boat reaches destination, you get $100.

But the work takes a toll.

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How much effort do you invest…

100% (value if success = 0, -100 if failure)

75% (value if success = 25, -75 if failure)

50% (value if success = 50, -50 if failure)

25% (value if success = 75, -25 if failure)

0% (value if success = 100, 0 if failure)

How much effort do you invest…

100% (value if success = 0, -100 if failure)

75% (value if success = 25, -75 if failure)

50% (value if success = 50, -50 if failure)

25% (value if success = 75, -25 if failure)

0% (value if success = 100, 0 if failure)

The Problem of Collective Action

Collective action problems are situations in which rational behavior on the part of individuals leads to outcomes that leave the group worse off.

Three Basic Types

1. Coordination Problems

2. Free-Rider Problems

3. Tragedy of the Common Problems

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Problem # 1: Coordination Problems

Coordination problems occur when each member of the collectivity agrees on what it wants; each is prepared to contribute to the collective effort but must figure out how to coordinate his or her effort with those of others.

Examples: radio stations, street signs, flight instructions (English), and on and on.

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Coordination Problem

Coordination Problem

43%

Swerve

57%

Crash

- Roads Closed for Hours before - Everyone had to pull over and stop before Sunday 5a -Proceed to Other Side and Stop Again.

Coordination Review

Prisoner’s Dilemmas

Prisoner’s Dilemmas arise when a group would be better off if its members cooperated; however, individual members have an incentive to help themselves instead (and at the expense of the group).

There are two basic types of prisoner’s dilemmas:

free-rider & tragedy of the commons.

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Prisoner’s Dilemmas

Free-Rider Problem

Everyone wants some collective good…

but everyone also has incentives not to help attain it.

Tragedy of the Commons

Everyone has some collective good…

but everyone also has incentives not to help preserve it.

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Problem # 2: Free-Rider Problem

A free-rider problem occurs whenever individuals are tempted to withhold their contribution to the group’s efforts.

Occurs when contributing…

Won’t itself make a difference.

Won’t get you any extra benefit.

Example: National Defense

- Bill Gates total net worth about 110 billion.

- US spent 700 billion on defense in 2018 alone.

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This was the case of the 10 guys and a boat. Also true of environmental issues, national defense, social protests, among numerous others.

Free Rider Problems Dorm Room Clean-up

Pick Up Living Room

Vacuum Floors

Wipe Clean All Windows

Scour the Shower

Clean Sinks

Scrub the Toilets

Take Out Trash

Put Away Dishes

Say one roommate generously agreed to scour the showers. Are you now willing to scrub the toilets as one of your chores?

55%

Yes

45%

No

Say another roommate leaves on a road trip before doing any cleaning. Are you willing to do an extra chore to get the "to do" list done.

16%

Yes

84%

No

Dear Parents…

"Mom, dad, it's not what you think. I'm not a filth lord I just don't have the incentive to clean the apartment because I can just get my roommates to do it for me except they all think the same as me.”

- K

Dear Parents…

“It is because of my roommate. She is so busy with her school and works, so she got no time to clean..”

- H

Dear Parents…

“Get down and dirty about getting clean.”

- J

Problem # 3: Tragedy of the Commons

A tragedy of the commons problem occurs whenever individuals are tempted to ruin a collective good.

Occurs when someone’s action…

Won’t itself make a difference to the good.

Benefits you regardless of what anyone else does.

Example: California Groundwater.

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Collaborative Classroom?

Collaborative Classroom? First Exam

Poor Great 67.0 33.0

Collaborative Classroom? First Exam

I would choose to give poor instruction, because I do not know whether my partner would give me great or poor instruction, but that gives me a chance for me to get an A.

Collaborative Classroom? Second and Third Exams

Poor Great Poor Great 61.0 39.0 70.0 30.0

GPA = 2.66

A B+ C+ C- 22.0 12.0 22.0 44.0

GPA = 2.66 Notice: If All Gave “Great” Instruction, GPA = 3.3

A B+ C+ C- 22.0 12.0 22.0 44.0

Tragedy of the Commons Review

Discuss with your neighbor why “No” is the correct answer.

Why is it a “problem?”

Even well-intentioned people who all agree about what should be done might not be able to do it! Worse yet, you often deal with folks who are neither well-intentioned nor agreeable.

Thomas Hobbes referred to this type of chaotic world as “the state of nature.”

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Solving the “Problem”

Of course, people often cooperate, contribute, or otherwise solve such dilemmas. The Angier article, for example, describes how people seem “wired” to trust and cooperate with one another - even when exploiting would pay better.

So small groups of people working together can often overcome CAPs on their own…

https://www.youtube.com/watch?v=p3Uos2fzIJ0

Solving the “Problem”

… but not always (as we have seen)!

And the more people involved, the harder it gets to solve these problems in an ad hoc fashion.

Solving the Problem

Remember, this is not because individuals are malicious, or even disagreeable.

It is just that they either don’t know how to help (coordination) or don’t want to be saps if they do (free-rider and tragedy of the commons).

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Solving the “Problem”

Because problems of collective action abound – indeed, are more-or-less a part of “nature” – then reliably solving these problems is a fundamental aspect of human interaction.

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The Genesis of Government!

Here is where governments come into play.

Societies create a government to help its

members coordinate & cooperate.

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