Free rider problem
When a benefit cannot be withheld from those who did not pay for it, each person's best move is to let others provide it, so too little of it gets provided.
Often misread asExplaining it by selfishness, which fails to predict when it bites, since it bites just as hard among people who genuinely want the thing provided.
How to see it
If you cannot be kept out, you need not pay in
When a benefit cannot be withheld from people who did not pay for it, each person is better off letting somebody else pay. Everybody reasons that way, so too little gets provided, even though everybody would rather have the thing than not.
The checkThe driver is that contributions cannot be made a condition of benefit. Sincerely wanting the public good does not change the arithmetic of contributing to it.
Try itTen flatmates would each pay thirty pounds for a cleaner costing two hundred. Work out one person's position if they pay alone, and their position if the others pay. The second is better whatever they expect the others to do, and that is the whole problem.
Games that show it
Know these first
Leads on to
Easily confused with
Sources
- Olson, M. (1965). Harvard University Press.
- Samuelson, P. A. (1954). Review of Economics and Statistics 36(4), 387-389.