Collective Action

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Collective Action
Politics as Rational Choice II

• December 5, 2001
• PPS 55
• Renan Levine
• Graduate Instructor

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Cooperation is not automatic

• Institutions are necessary to get people to act
  together in pursuit of common goals
• Common interests are not enough
• Sometimes the common interest is mutually
  exclusive
• Desire to cooperate is not enough
• Possibility of opportunistic behavior
• Free Riders

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Opportunistic Behavior

• People get benefits of group effort w/o
  contributing or w/o contributing their fair share
• Cause Common Interest of getting something for
  nothing!
• Result Groups are not expected to form
• Applications Interest groups influencing
  government and influence/control over government
  institutions.

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Examples

• Senior Shuttle to Mall
• Will lobbying occur?
• Probably not! Each one thinks, it wont matter if
  I show up.
• American Students
• Why not powerful?
• Why is the NRA is so well organized?
• Answer How solve free-rider problem?

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Students Unite !!!

• Plan Finance lobbying effort through mass
  membership campaign
• 1st Problem Success will be collective benefit
  (public good).
• Assume benefitscosts
• Still not expect many members
• Optimal strategy is not to join whether there
  will be lots, some or only a few other members.

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What to do?

• Benefits from participation
• Coercion/Punish Defection
• Selective Incentives
• Groups mutate into service orgs?
• Groups w/o members

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Legislatures

• Deal - Now for Later
• Trigger Strategy Punish for every defection
• Important Shadow of Future
• Size of Coalitions dependent on voting rule

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Hobbes and the Boatmen
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Hobbes and the Boatmen

• Why does government exist?
• Solve collective action problem to ensure common
  safety and defense.
• Grant monopoly on use of force
• Downside Society has created a monster!
• Monster has own interests and claims increasing
  amounts of peoples wealth!

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Rent-Seeking

• Gap between economic rationalizations for state
  intervention in the economy and the actual
  properties of state intervention.
• Stems from principal agent problems

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Principal Agent Problem

• Exchange Relationship
• People (principals) retain agents to do a
  task/job
• Agents have comparative advantage for that task.
• Problem
• Controlling Agents!
• Ensure compliance with principals goals.

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Controlling Agents

• Problems
• Incompetence
• Opportunistic behavior
• Causes
• Agents are self-interested
• Specialized knowledge/skills (asymmetric
  information)
• Ex Non-Pareto Transfers by Legislature

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Who are the Winners?

• Information (costly)
• How will policy impact on personal wealth?
• Who are my potential allies?
• Policy Can you identify -
• The winners and losers?
• Neither?
• Only the winners?
• Only the losers?

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When transfer?

• Most transfers when winners can be identified
• Politicians have incentive to search for issues
  on which well organized groups gain transfers at
  the expense of diffuse general polity
• Ex Producers wield complete influence over
  regulators
• Producer-winners are easily identifiable
• They will not be opposed as long as consumers
  have no rational incentive to organize

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Who are the Winners?

• Groups who have already assumed start up (sunk)
  costs
• Lobbying is a by-product (AAA)
• Those who can easily communicate
• Labor and capital will sometimes ally in order to
  pursue benefits for an industry.

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Bleak?

• Election to highest bidder?
• Not always Must get votes not
• If one cannot get votes w/o the most then we
  have a problem!
• Connection between dollars and votes
• Reduce cost of finding out about candidate
• Reduce cost of getting to the polls

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Information

• Must weigh benefits of a good vs. bad decision
• If marginal cost of more information is too
  costly, then you might stick with decision.

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Summation/Highlights

• Collective Action Problem means that groups will
  not often form.
• Collective Action can be solved institutionally
• Organizations
• Legislatures
• Rent-Seeking

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Summation/Highlights II

• Principal Agent Problem (related to CA)
• Caused by information assymetries
• Because info is costly
• Result in non-Pareto transfers
• To easily identifiable winners!