Collective action problems

Definition

Collective action problems occur when individuals within a group have incentives that are not aligned with the overall group's best interest, leading to outcomes that are suboptimal for all involved. These problems arise in situations where individual members of the group could benefit from cooperating but struggle to do so because they prioritize personal gain over collective welfare.

Related terms

Free: rider problem - This is when individuals consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production, underming collective efforts.

Public goods: Goods that are non-excludable and non-rivalrous in consumption, meaning no one can be excluded from using them and one person's use does not reduce availability for others.

Tragedy of the Commons: A situation in which individuals acting independently and rationally according to each's self-interest behave contrary to the whole group's long-term best interests by depleting some common resource