I. Terminology

1. RATIONAL (in the Economic Sense) = to Maximize One's Expected Return (Total Expected Benefits Less Total Expected Costs). This sense of rationality is the twentieth-century development of the concept of INSTRUMENTAL RATIONALITY. (Note that to be rational in the economic sense does not require that one be an egoist.)

2. COLLECTIVE ACTION PROBLEM = A situation in which everyone (in a given group) has a choice between two alternatives and where, if everyone involved acts RATIONALLY (in the economic sense), the outcome will be worse for everyone involved, in their own estimation, than it would be if they were all to choose the other alternative (i.e., than it would be if they were all to "irrationally" (in the economic sense)).

By convention, in any Collective Action Problem, the economically rational alternative is referred to as "Defection" ("D"); and the economically irrational alternative is referred to as "Cooperation" ("C").

II. Matrix Representation Of One Sort of Collective Action Problem









N-Person Collective Action Problem In Which A Large Number (N) of Individual Agents Face

A Choice Either To Cooperate (C) Or To Defect (D).

(In the example discussed in class, D = Pollute and C = Don't Pollute.)

FREERIDING. In a Collective Action Problem in which most agents choose to Cooperate, Defectors are referred to as FREERIDERS, because they benefit from the Cooperation of others, but are unwilling to reciprocate Cooperation.

PRISONERS' DILEMMA. A Collective Action Problem is sometimes referred to as a Prisoner's Dilemma. The standard Prisoners' Dilemma is a Two-Person Collective Action Problem. By analogy, an N­Person Collective Action Problem is often referred to as an N-Person Prisoners' Dilemma. On page 183 of the text, Bonevac provides matrices for two different 2-Person Collective Action Problems, one of which is the standard Prisoners' Dilemma. You should be able to explain why the two matrices on page 183 of the text satisfy the definition of a Collective Action Problem given above.