Table of Contents

Constitutional Economics and Public Institutions

Constitutional Economics and Public Institutions

New Thinking in Political Economy series

Edited by Francisco Cabrillo and Miguel A. Puchades-Navarro

This extensive book explores in detail a wide range of topics within the public choice and constitutional political economy tradition, providing a comprehensive overview of current work across the field.

Chapter 15: Cooperation in multilateral PDs: self-selected vs pre-defined groups

Viktor J. Vanberg

Subjects: economics and finance, public choice theory, politics and public policy, public choice


This chapter is concerned with the issue of cooperative behavior in settings where adverse incentives exist. This is typically the case, for instance, in social dilemma situations of the Prisoner’s Dilemma (PD) type. My specific focus will be on the issue of cooperative behavior in multilateral PDs in contrast to bilateral PDs. The ‘multilateral’ is meant to describe social settings that cannot be factored down into elementary bilateral relations between agents. Multilateral PDs in this sense are exemplified by the kind of collective goods problems involved in team production that, for instance, private firms, cooperatives, and clubs must overcome to be successful joint enterprises. In a generalized sense the term ‘joint enterprise’ is used here to include all joint activities in which a team surplus can be realized if all (or a sufficient number of) team-members cooperate, but which yields less than what the participants could realize in separate action if all defect. In such joint enterprises a situation where all participants contribute is clearly preferable for everybody involved to a situation where all ‘defect’ or seek to free-ride, yet the PD-nature of incentives works against the cooperative outcome.

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