Ostrom - Analyzing Collective Action

Question 1

How can a ​​collective-action problem be analysed in game-theory?

Answer 1

As a game where the Nash equilibrium yields less than the socially optimal outcome

Question 2

Is a rational choice model realistic?

Answer 2

A theory of boundedly rational, norm-based human behaviour is a better foundation for explaining collective action than a model of maximising material payoffs to self

Question 3

Which seven structural variables can affect cooperation?

Answer 3

1. The number of participants involved
2. Whether benefits are subtractive or fully shared (public goods vs common-pool resources)
3. The heterogeneity of participants
4. Face-to-face communication.
   // Only in repeated situations →
5. Information about past actions
6. How individuals are linked
7. Whether individuals can enter or exit voluntarily

Question 4

How does the number of participants involved influence cooperation?

Answer 4

• The more participants, the lower the probability of cooperation
• Because: Participant think their free-riding is less noticed AND an internal agreement involves higher transaction costs in larger groups
  (Some argue for a curve shape, as too little groups have no resources for coop)

Question 5

How do subtractive or fully shared benefits (public goods vs common-pool resources) influence cooperation?

Answer 5

A public good may be easier, as it benefits from more participants’ additional resources and everyone can enjoy it
CPR: an increase in number of participants is negatively related to achieving social benefits

Question 6

How does the heterogeneity of participants influence cooperation?

Answer 6

• One or a few individuals with much stronger interests in achieving a public good can increase the probability of a group achieving a public good increased
• But: heterogeneity in assets, information, and payoffs could be negatively related due principally to increased transaction costs and conflict

Question 7

How does face-to-face communication influence cooperation?

Answer 7

In contrast to classical theory, communication has empirically an effect and can be used for “moral suasion” and increases trust after an interaction

Question 8

How does information about past actions influence cooperation?

Answer 8

• If other players cooperate, this can build up trust over time
• But: In larger groups it is usually more difficult to observe other’s actions

Question 9

How do the links between individuals influence cooperation?

Answer 9

Individuals who are linked in a network where A contributes resources to B, B to C, and C to A—or any similar unidirectional linking—are more likely to contribute to each other’s welfare to a generalised pool
→ Because for a general pool they expect to be able to free-ride for longer

Question 10

How does the possibility to enter or exit voluntarily influence cooperation?

Answer 10

If individuals can choose to opt out of a game, the probability of cooperation increases (but mainly for smaller groups)

Question 11

What needs to be included apart from rational profit-maximization?

Answer 11

• Individuals tend to use heuristics (rules of thumb) about other, due to lack of information
• Learned social norms influence behaviour

Question 12

What does the core relationship consist of?

Answer 12

structural variables help evoke norms, reputation, trust and reciprocity