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Moral hazard and free riding in collective action

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  • Vincent Anesi

Abstract

Most political and economic theorists point to moral hazard in teams as the main obstacle to lobbies' collective action. In this paper, we address this important issue with a coalition-formation game. In the process of doing so, we characterize equilibrium lobby structures both in the absence and in the presence of moral hazard. Three notable results emerge from such an exercise: (i) an equilibrium lobby structure exists under both specifications of the model, (ii) moral hazard in teams may raise large groups' equilibrium lobby size, and (iii) it may also raise the total contribution to lobbying of large groups with low organizational costs.
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  • Vincent Anesi, 2009. "Moral hazard and free riding in collective action," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(2), pages 197-219, February.
    • Handle: RePEc:spr:sochwe:v:32:y:2009:i:2:p:197-219
    DOI: 10.1007/s00355-008-0318-8
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    Cited by:

    1. Zudenkova Galina, 2017. "Lobbying as a Guard against Extremism," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(1), pages 1-17, January.
    2. Martimort, David, 2019. ""When Olson Meets Dahl": From Inefficient Groups Formation to Inefficient Policy-Making," CEPR Discussion Papers 13843, C.E.P.R. Discussion Papers.
    3. David Rietzke & Brian Roberson, 2013. "The robustness of ‘enemy-of-my-enemy-is-my-friend’ alliances," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(4), pages 937-956, April.
    4. Joan Esteban & Esther Hauk, 2008. "Leadership in Collective Action," UFAE and IAE Working Papers 756.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    5. Zudenkova Galina, 2017. "Lobbying as a Guard against Extremism," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(1), pages 1-17, February.
    6. Zudenkova, Galina, 2010. "Sincere Lobby Formation," MPRA Paper 28249, University Library of Munich, Germany.
    7. Lukas Block, 2022. "Coalition formation versus free riding in rent-seeking contests," Working Papers Dissertations 93, Paderborn University, Faculty of Business Administration and Economics.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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