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Noah Hammarlund

Reading Summary
Hardin on Collective Action

Both game theory and theory of public goods have important contributions to understanding collective
action problems

Public goods
Jointness in supply (non-rival), non-excludable
Hard to think of pure public good but useful framework- will instead call collective or group
Samuelson total private goods are sum of individuals consumption, public goods are same
consumption level for everyone
More concerned with provision groups succeed or fail in provision part
Similarity between problem of collective action and public good- costliness of excludability from
consumption eliminates incentive for individuals to pay for the good

Olsons Model of Collective Action
If each individual benefit does not exceed the cost for a certain group , even if the total benefits
exceed cost, provision will fail without further incentives (calls these groups latent groups)
Latent groups: unions, professional associations, lobbies all need to induce contributions
through incentives
Wishes to show that 1) rational individuals would not contribute to a latent group 2) Large groups
are less likely to succeed than small ones (2
point is not defended here)
Conclusion that latent groups will fail is modified by entrepreneurship, incentives, and extra-
rational behavior as possible ways latent groups can succeed

Game Theory and Prisoners Dilemma
From Prisoners Dilemma, personal rationality points to dominant strategy of defection
Applied to collective action: individuals dominant strategy in group good would be to not
contribute even though all would be better off if provided since could not be excluded if provision
is met (shown through payoff matrix)
Equilibrium solution is not pareto-efficient since all could be made better off without hurting
Thus, solutions to prisoners can be applied to problem of collective action

By-product Theory (Olson)
Success seen by some groups due to by-product of private provision (incentives)
Eg. Lobbying for an outcome, social activity, discounts/perks for joining etc
Two problems: 1) incentives we see are often not very compelling and could often be provided
more efficiently by private market 2) does not explain why groups come into existence
Existence question can be answered by extra-rational behavior or 1) political entrepreneurial
behavior (private interest) 2) cooperation began for more limited interest and was thus smaller

Political Entrepreneurship
Private interest to work to promote collective benefits for some groups
Entrepreneurs may work to benefit small groups 1) candidates for office who recognize that even
though groups may not be organized over an issue, they may give political/voter support 2)
further own career by seeking collective action, bigger actions/organization would be even better
for that entrepreneurs career.
Helps explain how some unorganized groups receive benefits from political action

Rationality in the Prisoners Dilemma

Conclusion of prisoners dilemma is often said to be (veridical- seems odd at first but upon
investigation makes sense) paradoxical since collective bargaining could allow for higher benefits
to each but as we investigate further we see that individual rationality does not lead to this
outcome (also do not have costless bargaining)
With strategic calculations added, it may be compelling to think that a strategically rational
person would expect other game players to be the same (mutually expected rationality)
St. Peters paradox presents a gamble with a supposed infinite expected value, but real world
implications imply that this infinite value is likely bounded (assumptions of paradox cannot be
met in real occurrences)
Rational cooperation can occur in iterative plays of prisoners dilemma
Hardin argues that the single game prisoners dilemma equilibrium is not a paradox since it is
clear that self interested behavior can sometimes lead to bad outcomes
Instead, argues that positive outcomes from self interested behavior are more of a veridical
Hardins conclusion from analysis of n-person or iterative games is that there is no best
strategy. Cooperators can only punish defectors by suffering loses themselves
Possible solution is incentivizing such games that are not isolated from other social interactions
(allow for social punishment rather than in-game punishment)

Hardin, R. (1982). Rationality & Prisoners Dilemma,. In Collective Action. Baltimore: Resources for the