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Free Riding and National Defense - some problems and possible solutions

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Each individual realizes that he cannot control the behaviour of other individuals, and whatever his choice the change in the final outcome will be small. There is no infinite regress.

You didn't follow my explanation, but it doesn't matter.  The point is that Person A does not automatically expect Persons B-Z to do something different than what he does and furthermore does not act without regard to risk of Person B-Z doing nothing.

The marginal effect of the individual's "small" contribution is a different subject.  How Person A will overcome his individual incapacity to do X does not pertain to the free rider problem hypothesis.  It is an economy of scale matter.  Not to be conflated with the holdout spiral of death.

Because if other people exist there's a chance they could pay for the service before him.

What I'm saying here and overall is that the particular external/uncontrollable source of the Earth-saving phenomenon is moot in the choice analysis.  For example, let's say a second meteor might intercept the first one before it hits Earth and you have the full individual capacity to build the laser.  The decision in this scenario is qualitatively the same as in the original scenario.  You assess the chance of the uncontrollable save event occurring and assess your tolerance for taking on the risk of a hit in order to accrue the "gain" as the unspent opportunity cost of the laser.  Probability and risk assessment does not amalgamate with economy of scale problems in a puff of smoke and sorcerous incantation to create a holdout spiral of death.  The two are unrelated for all intents and purposes.

I'm trying to block discussion of partially public goods because it will muddle the thread...  Organizing to provide goods and services, even public ones, are real things.

I'm not talking about public goods.

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Sieben replied on Tue, Aug 3 2010 7:05 PM

Caley McKibben:
The point is that Person A does not automatically expect Persons B-Z to do something different than what he does and furthermore does not act without regard to risk of Person B-Z doing nothing.
He does not think B-Z do the opposite of what he does. He assumes they are going to do whatever they're going to do. If B-Z is a very large group, he will reason that his contribution to the public good is so small that it doesn't matter what he does. His paying is essentially throwing money away.

Caley McKibben:
How Person A will overcome his individual incapacity to do X does not pertain to the free rider problem hypothesis.
Well, it is because he has an option to be a free rider.

Caley McKibben:
What I'm saying here and overall is that the particular external/uncontrollable source of the Earth-saving phenomenon is moot in the choice analysis.
So, if bill gates promises to build a laser but hopes other people will pitch in, do you think rational profit maximizing players will? It does make a difference if other people can provide the public good...

Caley McKibben:
For example, let's say a second meteor might intercept the first one before it hits Earth and you have the full individual capacity to build the laser.  The decision in this scenario is qualitatively the same as in the original scenario.  You assess the chance of the uncontrollable save event occurring and assess your tolerance for taking on the risk of a hit in order to accrue the "gain" as the unspent opportunity cost of the laser.
The fact that you had to decrease the relative cost of the public good down to the individual level, AND complicate the public good with probability/risk assessment makes me scared. I don't follow what it proves, and if it does prove something you should be able to apply it back on the original example.

Caley McKibben:
I'm not talking about public goods.
Exactly.

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Well, it is because he has an option to be a free rider.

Do you not understand the difference between the economics of scale and getting something for nothing?  I don't know how this can seem so foggy.  It's like an apple in one hand and an orange in other.  If you can't lift a rock by yourself, you have a challenge in achieving the required operation size by cooperating with other people.  That is one thing.  You can laze around waiting for someone else to do something for you at the risk of it not being done.  That is another thing.  Two different things.

It does make a difference if other people can provide the public good...

It does not make a difference that they are people.

The fact that you had to decrease the relative cost of the public good down to the individual level, AND complicate the public good with probability/risk assessment makes me scared. I don't follow what it proves, and if it does prove something you should be able to apply it back on the original example.

The cost is not reduced.  I changed two things: 1. Extricated the free riders (i.e. the public).  Our super fellow who can build the laser alone is the only man on Earth. 2.  Replaced the removed risk of waiting for the public with a different risk, relying on the second meteor.  I then demonstrated the exact do-or-not dilemma (the probability/risk part) from the original scenario applying to this new one (i.e. it was applied to the original).  This proves that the existence of free riders is not required for that do-or-not dilemma; i.e. there is no unique problem created by free riders.

Before you say, "Aha!  But a lone individual in original scenario cannot but waste his efforts in vain!"  See the first paragraph.  That is a logistical problem only.

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Joe replied on Thu, Aug 5 2010 8:33 PM

my guess is that in practice this would be dealt with mostly via homeowners/condo associations.  In order to live in neighborhood x your fences have to be one of three shades of white and you also must belong to a PDA that meets the following minimum requirements.

 

There are also pricing/marketing strategies that I think would be very useful, such as offering bulk prices in that for every new person that signs up for our service everybody's monthly rate in this neighborhood drops by x amount. Also, with certain levels of commitment, the agency would offer certain special services (i.e patrol, setting up cameras, alarm systems, or if its a big enough community, a nearby station, who knows) So there would be lots of social pressure to sign up, as well as economic because it will be cheaper and cheaper .

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