Collective Action

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Collective Action(????)
Tsinghua University Graduate School of Economics
and Management

• Andrew Sheng
• Fall 2009

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• Fragmentation of Governance
• We have One Global Market, but financial
  institutions are regulated under National laws
  Fragmentation of enforcement
• At national level, different agencies are in
  charge of different institutions, so that there
  are overlaps, gaps, turf-fighting and
  non-cooperation to solve complex social issues
• Mervyn King - Banking is Global in Life and
  National in Death but regulated in parts - real
  issue is not theory or policy but Collective
  Action at National and Global level
• All partial solutions are by definition not
  first best.

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The Logic of Collective Action Public Goods and
the Theory of Groups

• Mancur Olson
• 1971

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• Two questions
• What makes collective action possible?
• What is the relationship between group size
  and the cohesiveness and effectiveness of the
  group?
• Basically, his point is that "rational,
  self-interested individuals will not act
  voluntarily to achieve their common or group
  interests". The reason for this claim is that,
  when interests are shared, rational actors should
  prefer to free-ride.

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What makes collective action possible?

• Individual contributions are determined by the
  selective incentives.
• Moreover, empirical evidence suggests that
  private incentives have a smaller effect than it
  is indicated by the theory.

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What is the relationship between group size and
the cohesiveness and effectiveness of the group?

• Group size is inversely related to successful
  collective action
• The collective good will be provided by the
  "largest" individual in the group, i.e., that
  individual for whom the personal gain is the
  largest.
• The larger the group, the smaller the capacity of
  one actor to cover the costs, and therefore the
  larger the suboptimality.
• It is not only the number of the members of the
  group that matters, but also the degree of
  homogeneity of the group.

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GOVERNING THE COMMONSThe Evolution of
Institutions for Collective Action

• By Elinor OstromCambridge University Press,
• 1990, 280 pages

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Ostrom 1990Three influential models to discuss

• 1. The tragedy of the commons(?????),
• 2. The prisoners dilemma(????),and
• 3. The logic of collective action(???????)

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The unsolved problem

• How do we govern the exploitation of natural
  resources?
• Some recommend the state
• Some recommend privatisation
• Some communities have successfully managed
  scarce resources for a long time without either a
  state or private ownership, relying on other
  types of institutions self-governance

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The state as solution

• The tragedy of the commons
• Hardin 1968, Aristotle, Hobbes 1651,Foster
  Lloyd 1833, Scott Gordon 1954,and Dales 1968 all
  describe the same problem (for references see
  Ostrom 1990)
• The commons as a Prisoners Dilemma game

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Interest groups cooperating

• Mancur Olson did not quite believe interest
  groups (IG) would cooperate as assumed
• If the collective good is available to all,
  once it is produced, rational actors have little
  incentive to contribute voluntarily.
• (but he believed it occurs in small groups
  and keeps the door open for intermediate size
  groupscompare Douglas 1986 ch 2-3)

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Privatization

• Dividing land into individually owned plots is
  not costless
• Fencing costs
• Erratic rains may necessitate insurance
  schemes and/ or a market in grazing rights
• Privatisation of non-stationary resources like
  fish or water is still an unsolved task

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Self-organisation and self-governance

• The central question in this study is how a
  group of principals who are in an interdependent
  situation can organise and govern themselves to
  obtain continuing joint benefit when all face the
  temptation to free ride, shirk, or otherwise act
  opportunistically. (Ostrom 1990, p.29)
• It is still a theoretical puzzle.

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Public/Private GovernanceHow to deal with Moral
Hazard/Capture
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A Behavioral Approach to the Rational Choice
Theory of Collective Action Presidential
Address, American Political Science Association

• Elinor Ostrom
• 1998

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The Core Relationships Reciprocity, Reputation,
and Trust
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Illustrative Theoretical Scenarios
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Collective Action and the Evolution of Social
Norms

• Elinor Ostrom 2000

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• Individuals voluntarily organize themselves so as
  to gain the benefits of trade, to provide mutual
  protection against risk, and to create and
  enforce rules that protect natural resources.
• Governmental policy can frustrate, rather than
  facilitate, the private provision of public goods
  (Montgomery and Bean, 1999).
• In all known self-organized resource governance
  regimes that have survived for multiple
  generations, participants invest resources in
  monitoring and sanctioning the actions of each
  other so as to reduce the probability of free
  riding (Ostrom, 1990).

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Building a Theory of Collective Action with
Multiple Types of Players

• Assuming the existence of two types of
  "norm-using" players-"conditional cooperators"
  and "willing punishers"-in addition to rational
  egoists
• Conditional cooperators are individuals
  who are willing to initiate cooperative action
  when they estimate others will reciprocate and to
  repeat these actions as long as a sufficient
  proportion of the others involved reciprocate.
• Conditional cooperators tend to vary,
  however, in their tolerance for free riding. Some
  are easily disappointed if others do not
  contribute, so they begin to reduce their own
  contributions.

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The Evolution of Rules and Norms in the Field

• Contextual variables that affect the rate of
  contribution to public goods(????)
• the type of production and allocation functions
• the predictability of resourceflows
• the relative scarcity of the good
• the size of the group involved
• the heterogeneity of the group
• the dependence of the group on the good
• common understanding of the group
• the size of the total collective benefit

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• he marginal contribution by one person to the
  collective good
• the size of the temptation to free ride
• the loss to cooperators when others do not
  cooperate
• having a choice of participating or not
• the presence of leadership past experience and
  level of social capital
• the autonomy to make binding rules and
• a wide diversity of rules that are used to change
  the structure of the situation

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The Emergence of Self-Organized Collective Action

• The presence of a leader or entrepreneur, who
  articulates different ways of organizing to
  improve joint out-comes, is frequently an
  important initial stimulus.
• If a group of users can determine its own
  membership, the group has made an important first
  step toward the development of greater trust and
  reciprocity.

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COLLECTIVE ACTION AND PROPERTY RIGHTSFOR
SUSTAINABLE DEVELOPMENTUnderstanding Collective
Action

• Elinor Ostrom
• 2004

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COLLECTIVE ACTION AND COLLECTIVE ACTION PROBLEMS

• Collective action occurs when more than one
  individual is required to contribute to an effort
  in order to achieve an outcome.
• if all individuals pursue short-term,
  self-centered benefits, no collective benefits
  are achieved.

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CAN PARTICIPANTS OVERCOME THE COLLECTIVE ACTION
PROBLEMS THEY FACE?

• One view effective collective action can be
  achieved only if external policymakers impose
  government or private ownership.
• Outsiders efforts to impose property rights
  often fail to take into account indigenous
  property rights and the organizations that
  individuals themselves have established over
  time.
• Any effort to influence policies for managing
  water, rangelands, forests, fisheries, and other
  natural resources must take into account factors
  that increase the likelihood that individuals
  will engage in their own collective action to
  manage local resources.

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WHAT PARTICIPANT ATTRIBUTES ARE CONDUCIVE TO
OVERCOMING COLLECTIVE ACTION PROBLEMS?

• The first characteristic of successful efforts is
  agreement by the involved individuals that the
  problem at hand is an important one.
• A second factor is the degree of autonomy a group
  has to take collective action on its own or
  within a nested institutional setting, and this
  factor can depend on the macro political-instituti
  onal environment in which individuals find
  themselves.
• Other factors relate to the way users of a
  resource view both the future and each other.
  Secure property rights for the group can help
  reinforce a long-term perspective. If
  participants fear that others are going to take
  advantage of them, no one will wish to initiate
  costly actions only to find that others are not
  reciprocating.

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WHAT RESOURCE SYSTEM ATTRIBUTES ARE CONDUCIVE TO
OVERCOMING COLLECTIVE ACTION PROBLEMS?

• Four factors that enhance the likelihood
• 1. The flow of resource units, such as fish,
  water, or forest products, is relatively
  predictable.
• 2. Resources are scarce but not entirely
  destroyed.
• 3. Reliable and valid indicators of the condition
  of the resource system are available locally at
  reasonable costs.
• 4. The resource system is moderately sized.

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• The presence of all four conditions enhances the
  probability that local users can come to a common
  understanding of the nature of the system they
  are using and of how their own collective action
  can create rules about who uses how many of the
  resource units and where, when, and how these
  uses are allowed.

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  WHAT CAN BE DONE?

• Imposing top-down, detailed prescriptions
  for solving collective action problems by
  policymakers located far from particular
  collective action problems has rarely been a
  successful strategy.
• National agencies can nonetheless
  accomplish a great deal by
• providing accurate information about natural
  resource systems
• recording key information about the behavior of
  wildlife and fisheries not available to local
  users
• providing arenas for low-cost conflict
  resolution
• designing mechanisms for discourse and debate by
  local users in their effort to learn from one
  another and discover new strategies

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• disseminating information about successful
  organizations and the design principles that
  characterize them and
• creating institutional mechanisms that local
  participants can use to organize themselves, such
  as through special districts, private
  associations, and local/regional governments.
• It is also important that policymakers
  not presume that they are the only relevant
  actors in efforts to solve collective action
  problems. They have partners if they are willing
  to recognize them.

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Policy Networks and InstitutionalCollective
Action A Research Agenda

• John T. Scholz Richard C. Feiock
• T. K. Ahn

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• Policy fragmentation in the American federalist
  system leads to inefficiencies as decisions by
  one authority impose positive and negative
  externalities on other authorities and their
  constituencies.
• two competing perspectives relating networks to
  collective action
• tightly-clustered strong-tie relationships
• extensive, weak-tie relationships

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The proposed inquiry focuses on two critical
settings,

• oneemphasizing horizontal fragmentation (the
  joint provision of local services by
  municipalities),
• and the other emphasizing vertical fragmentation
  (the development of joint projects among federal,
  state, and local resource management agencies).

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• Centralization remains an attractive option but
  imposes large costs, loses much of the advantages
  offered by federalism, and can only be imposed on
  a very limited number of issues.
• Privatization can reduce coordination problems in
  situations were markets can be created, but
  raises further problems of control and
  coordination.

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Game theory and network analysis are two of the
most important tools of such micro-level analysis.

• Game theory provides tools to model how
  preferences, beliefs, and constraints affect
  choices in strategic (or interactive)
  decision-making situations.
• Network analysis, on the other hand, looks at the
  way multiple interactions of a certain kind are
  connected to each other and studies how the
  configuration of the interactions affect the
  outcomes for individuals and the group as a whole.

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An analysis of networked-games

• Specialized federal, state, and local agencies
  can dramatically impact each others policies in
  a given ecosystem, and dozens of local
  governmental units in a metropolitan area form a
  web of contracts for public service delivery.

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• Partnerships, or formalized local policy
  networks, evolve to coordinate policies in
  watersheds that have greater problems and more
  social capital.
• Federal programs can successfully enhance the
  size and diversity of local policy networks.
• Dispersed weak-tie networks appear to be more
  effective than clustered strong-tie networks in
  developing joint cooperative projects

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• Empirically, we have found that
• Larger, interconnected networks (such as Tampa
  Bay) lead to greater agreement and more positive
  assessments of environmental policies

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• We propose to develop and test two primary
  hypotheses that we believe can resolve this
  dispute
• First, strong-tie networks are best at enhancing
  credibility and trust required to resolve
  cooperation problem
• Second, weak-tie bridging networks are best at
  obtaining and distributing information
• Thus we expect stakeholders with larger
  bridging networks to dominate in planning, but
  stakeholders with denser networks to do better in
  implementation stages of joint undertakings.