MAY E.

ESCALONA
MPA_PUBLIC POLICY
REFLECTION PAPER

Eli-The Little Red Elevator

This short video animation illustrates how constraints to collective action play out and
leads to difficulties in pursuing the common good. Set in a four-story apartment building, the four
tenants had to discover a way to fix their shared resource- a little red elevator - despite the
different interests of each tenant.

I can relate this to my frustrating personal experience as an aspiring business owner way
back 2016. My ultimate dream in life is to have a successful, stable and sustainable business
selling my own brand, so I invested time, money and effort to jumpstart my pearl shake business,
and I called it ‘ShakeSphere’.

My stall’s location was very ideal since it was situated between two schools, a private
secondary school and a public elementary school, near a crowded village and our public market.
My cousin learned about it and asked if she can share with my renting space to sell her own
products (street foods). Because the rental costs were really high- water, electricity on top of the
space rental, we agreed for 70/30 payment. We were on the same page, with the same goal –
ROI the soonest possible time.

Everything went smoothly at first; the students patronized my product and my stall was
eventually frequented by other customers. I was very satisfied with my daily earnings, I’m hitting
the targets, and the same goes with my cousin, as far as I know. When the bills came, she refused
to pay because she earned very little, according to her. And that was the start of my dilemma.
She was clearly free riding. She uses, I pay. We both utilized resources but I was forced to pay. I
can’t demand out of respect ‘coz she’s much older than me, and for the reason that what we
have was just verbal agreement.

I was upset and confused. I knew she was earning enough but she’s telling otherwise. It’s
out of my control; I can’t monitor her daily earnings because I was focused on mine. That was
asymmetric information. She knows, I don’t, she gains.

It goes on for months, because it is impossible to exclude her from consuming water and I
can’t take it anymore. So I needed to use strategic use of knowing rules and preferences. I
warned her that I will request the lessor to cut our water supply since I’m using it minimally.
That’s my agenda setting. She pleaded not to ‘coz she consumes large amount of water daily. She
was left with no other choice but to pay the utilities unless of course she wanted to forgo the
water service she badly needs. I guess that’s bundling in a way.

Because she broke her promise, she suffered credible commitment. She was forced to pay
her overdue share, but in installment.

Since then, she cooperated and gave her fair share.

What is collective action? The situation in which multiple individuals would benefit from a certain
action BUT associated cost makes it implausible that any one individual can or will undertake and
solve the problem alone. We will see that wildly dissimilar problems share incentive structures that
are remarkably alike. With  an improved understanding of the real nature of the problem, and  an
ability to name things, We are able to better develop strategies as a collective and translate our
collective intentions into action.

I use … You pay… …but the community loses Free rider

I know…He doesn’t... I gain! …but the community loses Asymmetric Information

Agenda Setting Strategic use of decision rules and procedures

I break my promise… I suffer Credible Commitment

Tragedy of the Commons

Constraints to Change The Free Rider SanctionsBundling Asymmetric Information Lobbying

Awareness Campaign Agenda Setting Knowing RulesPreferencesLack of Trust Repeated Meetings
Credible Commitment Tragedy of the Commons Trust, reciprocity, reputation, cooperation Selected
Constraints to Collective Action: What different stakeholders might confront and what they can do to
address them ? Constraints to change and a few selected interventions

Personal reflection and journaling: reflect on the concepts we reviewed. Identify 1 or 2 illustrations
and name the collective action constraint (and/or solution) from your professional or personal
experience.
Summary Slide: What is Collective Action? Change is often stymied because relevant parties face
certain constraints to collective action that limit their ability to connect and collaborate with one
another. Collective action refers to any situation in which multiple individuals would benefit from a
certain action except for an associated cost making it implausible that any one individual can or will
undertake and solve the problem alone. It is a term that has roots in many areas of the social sciences
including psychology, sociology, political science and economics. Collective action issues are at the
very heart of development. When properly understood and used effectively, collective action has the
power to reach better development outcomes. Common issues in collective action include:

Tragedy of the Commons – when an actor exploits common resources, like water, but in so doing
contributes to the depletion of such a good

Free rider – a situation in which individuals or organizations consume more than their fair share of a
resource or shoulder less than a fair share of the costs of its production

Informal sanctions Bundling

Information Asymmetry – one party has more or better information than the other, leading to an
imbalance of power

Public interest Lobbying Mass Awareness Campaign

Credible Commitment – any arrangement or mechanism that makes it very costly for someone to go
back on a promise

Agenda Setting – the strategic use of rules and procedures by an individual or group to influence a
decision toward an outcome that is more favorable to them

Knowing Rules Preferences

“The willingness of a party to be vulnerable to the actions of another party based on the expectations
that the other will perform a particular action important to the trustor, irrespective of the ability to
monitor or control the other party.”

Repeated Meetings Credible Commitment

The dilemma starts when the red elevator broke because of first step to avoid this situation
would be to clearly show all the stakeholders in a targeted area the social benefits of enhancing the
physical urban environment and to give them incentive to make contributions to the collective action.
To achieve this, it is crucial to identify the unique urban assets of the area and share a vision of
enhancing the physical urban environment among stakeholders.
 As physical urban environment is composed not only of public realms but also of private
properties, collaborative institutional arrangements between public and private sectors (e.g. property
owners and investors) are an essential factor to enhance physical urban environment. In particular,
because long-term private investment is crucial to building up and maintaining momentum for
enhancement of physical urban environment, a public sector has to play a significant role at an initial
stage in giving private investors incentives to invest, such as intensive public investments in a
targeted area. By delivering a clear visual message to investors, they can see the benefit of their
investments. In other words it is key to establish a „critical mass‟ by which private investors have
confidence in the future of the area and are attracted to make investments.

Given that resources are usually limited, strategic allocation of human and financial resources
to a targeted area is important for maximising the value from inputs. An organisational arrangement,
such as an area-based organisation dedicated to enhancing the physical urban environment of a
targeted area, is crucial as a strategic vehicle to allocate the limited resources. Establishing an area-
based organisational arrangement would help facilitating collective decisionmaking and reducing
transaction costs associated with it. While such an arrangement requires stakeholders‟ own
institutional costs, a public sector can play an important role in reducing them through various types
of support (e.g. standardising the formation of such entities, financing the activities).

In order to promote active participation, it would be important to establish a decision-making

system which ensures to take stakeholders‟ opinion into consideration (e.g. the right to propose a
statutory 10 development plan), and to promote area-based organisational arrangements among
public and private stakeholders. In addition, in order to make stakeholder participation effective, it is
important for each participant to clearly recognise the value of information (e.g. the unique value of
urban townscape of an area) at their disposal. In this regard, area-based organisations and experts
who are engaged in raising awareness of stakeholders about such information would play a key role.
A public sector‟s effort to support them would be another key.

ich means it is impossible (or prohibitively expensive) to exclude a person from consuming it.
For example, it might be difficult to charge for the consumption of urban amenities, such as
distinctive townscape, without specifying the beneficiaries. The characteristic of non-excludability
leads to a free rider phenomenon. The provision to one person of the good which has non-excludable
characteristics entails its provision to other persons. Therefore 16 potential consumers will lose the
incentive to state their true willingness to pay since they can gamble on the good being provided to
others who express some willingness to pay. Those who gain the benefits from consuming the good
without paying for it are known as free riders. Because of the free rider phenomenon, the market
would fail to provide an efficient outcome (see Box 2.2). Free riding is a ubiquitous phenomenon in
the world of goods the consumption of which produces external benefits.1

The free-rider phenomenon causes public goods to be provided at a sub-optimal level.