Moral Hazard and Free Riding in Collective Action

Vincent Anesi

No 2007-04, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

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.

Keywords: Collective action; Moral hazard in teams; Lobby formation; Free-rider problem (search for similar items in EconPapers)
JEL-codes: C72 D72 H41 (search for similar items in EconPapers)
Date: 2007-08
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Citations: View citations in EconPapers (1)

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Journal Article: Moral hazard and free riding in collective action (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2007-04

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