POLI 365 1nd Edition Lecture 1 Outline of Current Lecture I. The Tragedy of the CommonsII. Collective Action Problema. SolutionsIII. Public GoodsCurrent LectureI. The Tragedy of the Commons The Tragedy of the Commons is a parable depicting a group of farmers who are tending to their cattle in a common pasture. They all wonder if they should add another head of cattle to their individual herds or not. Each individual farmer decides that it would be in their best interest to add an extra head of cattle because they will reap all ofthe benefits, and the costs would be minimal because it will affect all of the farmers in a very small way. This decision to do what is in an individual’s best interest, regardless of what the other actors are doing is an example of game theory. However, if every farmer adds a head of cattle, the common pasture will become overgrazed, which is not beneficial to any of the farmers. This situation, where rational, self-interested individualscan produce collectively and individually undesirable outcomes is an example of a collective action problem. II. Collective Action ProblemThere is a collective action problem when there is a discrepancy between individuals’ actions and individuals’ outcomes. The incentives are such that individuals’ actions lead to a market failure. In the example of the Tragedy of the Commons, the incentives for individual farmers to add an extra head of cattle would lead to overgrazingof the pasture, which is equivalent to a market failure, as the cattle would not have anything to eat and eventually die, leaving the farmers with no cattle and no profit. These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.a. Solutions to a collective action problemi. Privatization: when an actor privatizes their goods, the individual’s outcomes are a direct result of the individual’s actions. In other words, heor she is responsible for him or herself only. In the example of the Tragedyof the Commons, each farmer would be responsible for only his portion of the pasture. ii. Coercion: when regulations are instated and penalties are imposed for non-compliance. In our example, the farmers could be coerced into paying a fee to let their cattle graze on the common pasture land. If a farmer refused to pay the fee, his right to graze on the pasture could be revoked. The key to coercion is that an individual’s incentive structure must be changed in order for it to be effective. For example, if the penaltyfor not paying the grazing fee is not steep enough, the farmers might choose to not pay the fee and simply pay off the penalty. III. Public Goodsa. Characteristics of Public Goodsi. Joint-ness of supply (non-rivaled consumption): in order for something to be considered a public good, one person consuming the good does not prevent another person from also consuming the good. ii. Non-excludability: anyone can consume the public good, or it is difficult or impossible to prevent someone from consuming it. 1. Some examples of public goods include air, public safety, national defense, or a firework show. b. Complications i. There are few “pure” public goods 1. For example, in the Tragedy of the Commons, the common pasture land is not a good example of a public good, even though it might seem like one, because it can be privatizedii. Few goods have these characteristics by natureiii. Public goods are susceptible to collective action problems 1. Generally, we rely on mutual coercion to solve our collective action