 FREE-RIDER PROBLEM AND SOVEREIGNTY PROTECTIONNo CARF-F-531, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo Abstract: This study investigates a free-rider problem in long-term relationships, where, due to its non-excludable nature, each player attempts to seek loopholes to impose the burden of cooperation on other players. The players establish a committee that demands that each player select an action as promised by a pre-set commitment rule, contingent on all players’ announcements. We require the committee to protect player sovereignty in that no player is forced to carry out high cooperation levels against their will or receive future retaliation from the other players for their low commitment. We demonstrate a method called the cautious commitment rule, according to which the committee makes each player a promise that is not necessarily the same as, but close to, and not greater than, their announced upper limit. We show that by adopting this rule, the committee can solve the entire free-rider problem while adhering to sovereignty protection and rule sustainability. As an application, we investigate global warming and show that adopting the cautious commitment rule is crucial for solving the tragedy of the global commons that all countries in the world have long faced. Pages: 49 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cfi:fseres:cf531 Access Statistics for this paper More papers in CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo Contact information at EDIRC. |
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