Department of Agricultural and Resource Economics

Collective action, though often superior to anarchy, tends to be socially suboptimal even when the proclivity of free riders to defect is fully controlled and an organization for collective action is set up. An effective organization for collective action involving many participants will likely feature a coordinating center and peripheral participants. Even if the overall group objective is fully internalized by the center, the organizational equilibrium is suboptimal as it reflects the influence of narrowly rational peripheral participants. The efficiency loss is particularly evident in collective action over time, where group choices even within a single generation are likely to be myopic-a propensity further exacerbated by the center's short planning horizon.