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)).
3. 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.
Formally, a collective action problem is any failure of a group of individuals to achieve an outcome everyone one likes at least as well as the outcome that results from everyone acting in her own self-interest. This problem of collective action can be divided into two general classes. First, individuals could fail to coordinate when coordination is preferred to not coordinating (Taylor, 1976, 1987). Consider, for example, driving. Each individual prefers that everyone else drive on the same side of the road (from the driver's perspective) as she does. However, there are two possible ways to accomplish this. We can assume that no one really cares which side is chosen as long as everyone chooses the same side. In a world which has not yet solved this problem through established rules, everyone is presented with quite a quandary. This class of collective action problem, while one of the most common problems faced by society, is only beginning to be thoroughly studied. Although not part of my principal research, we will touch on the importance of coordination problems later when dealing with larger games.
The second class of collective action problem involves a failure to achieve an outcome everyone prefers over the outcome arrived at because each individual wanted to achieve her most preferred outcome without, in essence, paying for it herself. For instance, everyone rationally withholds contributions from the group project, resulting in a socially inferior situation in which the group project is not obtained. This is much more serious than the first class of collective action problems in the sense that, while coordination can occur by chance, each individual in this class of collective action problems has a strictly dominant strategy to follow. That is, an individual is better off not contributing to the group project no matter what the others do. With such a strict preference for the noncooperative strategy, rational individuals faced with a one-time collective action problem of this kind can never achieve the group project--not even by accident. Two well known examples of this class of collective action problem are the Tragedy of the Commons and the Prisoner's Dilemma (Taylor, 1976, 1987; Hardin, 1968, 1982; Axelrod, 1984). Of particular interest to me is the Prisoner's Dilemma, as it is the simplest of this second class of collective action problem. Through the use of the self-interest assumption and formal modeling (i.e., game theory), it is possible to create a representation of society as an equilibrium of the formal model. The Prisoner's Dilemma game is one building block of such a model.
TRAGEDY OF THE COMMONS. A much discussed sort of Collective Action Problem are those involving common-pool resources (e.g., supplies of oil or natural gas or fish stocks or grazing lands either unowned or owned in common). Unless there are other factors that change the numbers in the matrix, the result of economic rationality in such cases is less than optimal use of the resource-often exhaustion of the resource. This result is referred to as the Tragedy of the Commons.
to the Madisonian Critique is that government is a public good, therefore,
it is rational to receive the benefit, government, without paying the cost,
in Madisonian terms participate. Essentially, why vote? why be informed?