Free Rider Problem

• Free Rider Problem

https://store.theartofservice.com/the-free-rider-problem-toolkit.html

World Trade Organization - Principles of the trading system

1 #'Reciprocity'. It reflects both a desire to limit the scope of Free rider problem|free-riding

that may arise because of the MFN rule, and a desire to obtain better access to foreign

markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateralism|unilateral liberalization;

reciprocal concessions intend to ensure that such gains will materialise.B. Hoekman, The

WTO: Functions and Basic Principles, 43


Open source - Alternatives

1 * For own use - Businesses or individual software developers often create software to

solve a problem, bearing the full cost of initial creation. They will then open source

the solution, and benefit from the improvements others make for their own needs. Communalizing the maintenance burden distributes the cost across more

users; free rider problem|free riders can also benefit without undermining the creation

process.


Competition law - Neo-classical synthesis

1 Sources of this market power are said to include the existence of

externalities, barriers to entry of the market, and the free rider problem


MyCityDeal - Collective buying business model

1 In doing so, users or consumers are protected from the free rider problem where

individuals looking for a free ride ride the discounted savings of others who paid to

bring the deal-of-the-day to the actualization

threshold.[http://www.mycitydeal.co.uk/how-does-mycitydeal-work How It Works]

MyCityDeal Rather, users are only charged when the required number of people sign

up.https://store.theartofservice.com/the-free-rider-problem-toolkit.html

Assurance contract

1 An 'assurance contract', also known as a 'provision point

mechanism', is a Mechanism design|game theoretic mechanism and a

Financial engineering|financial technology that facilitates the

voluntary creation of public goods and club goods in the face of the free

rider problem.


Assurance contract

1 The free rider problem is that there may be actions that would benefit a large group of people, but once the action is taken, there is no way to exclude those who did not pay for

the action from the benefits


Brainstorming - Sources of brainstorming inadequacy

1 On the other hand, the variations on brainstorming that produce the social

matching effect would necessarily violate Osborn's principle of focus on quantity while those that produce the

free rider problem and evaluation apprehension would necessarily

violate defer judgment


Free rider problem

1 Free riding may be considered as a 'free rider problem' when it leads to under-provision of goods or services,

or when it leads to overuse or degradation of a common property

resource


Strategic alliance - Disadvantages

1 * Agency costs: As the benefit of monitoring the alliance's activities effectively is not fully captured by

any firm, a free rider problem arises (the free rider problem seems to be

less pronounced in settings with multiple strategic alliances due to

reputational effects).


Tragedy of the commons - Garrett Hardin's essay

1 Overall, Hardin argues against relying on conscience as a means of policing commons, suggesting that this favors selfish individuals– often known as Free rider problem|free riders– over those who are more

altruistic


Global public good - Challenges to the traditional definition

1 Such a company, then, becomes a corporate free rider problem|free rider, driving up the cost of the

public goods of clean air and water, which are often Transnationality|

transnational resources.


Homo economicus - Responses

1 Free rider problem|Free riders, for example, would have a major

negative impact on the provision of public goods


Public good

1 Public goods problems are often closely related to the Free rider

problem|free-rider problem, in which people not paying for the good may continue to access it, or the tragedy of the commons, where consumption of a shared resource by individuals

acting in their individual and immediate self-interest diminishes or even destroys the original resource


Public good - The free rider problem

1 This is called the free rider problem, or occasionally, the easy rider problem (because consumers'

contributions will be small but non-zero)


Public good - The free rider problem

1 The free rider problem depends on a conception of the human being as homo economicus: purely rational and also purely selfish—extremely

individualistic, considering only those benefits and costs that directly affect him or her. Public goods give such a

person an incentive to be a free rider.


Public good - Privileged group

1 The existence of privileged groups may not be a complete solution to the free rider problem, however, as underproduction of the public good

may still result


Public good - Merging free riders

1 Another method of overcoming the free rider problem is to simply

eliminate the profit incentive for free riding by buying out all the potential

free riders


Public good - Introducing an exclusion mechanism (club goods)

1 Although they can address the free rider problem, the downside of these

laws is that they imply private monopoly power and thus are not

Pareto-optimal.


Private good

1 Unlike public goods, private goods are less likely to have the free rider problem


Environmental economics - Common goods and public goods

1 A country's incentive to invest in carbon abatement is reduced

because it can Free rider problem|free ride off the efforts of other

countries


Web 2.0 - Characteristics

1 The impossibility of excluding group members who don’t contribute to the

provision of goods from sharing profits gives rise to the possibility

that serious members will prefer to withhold their contribution of effort and Free rider problem|free ride on

the contribution of others.


Environmental policy - Rationale

1 The free rider problem is when the private marginal cost of taking action to protect the environment is greater

than the private marginal benefit, but the social marginal cost is less

than the social marginal benefit


Labor rights

1 Labor counters that the open shop leads to a free rider problem.


Social movements - Dynamics of social movements

1 One of the main difficulties facing the emerging social movement is

spreading the very knowledge that it exists. Second is overcoming the free rider problem - convincing people to

join it, instead of following the mentality 'why should I trouble

myself when others can do it and I can just reap the benefits after their

hard work'.https://store.theartofservice.com/the-free-rider-problem-toolkit.html

Social movements - Framing perspective

1 In doing so, this general cultural approach also attempts to address the Free rider problem|free-rider

problem


Externality - Implications

1 Positive externalities are often associated with the free rider

problem


Collective action - Exploitation of the great by the small

1 Poorer individuals will usually have little choice but to opt for the Free

rider problem|free rider strategy, i.e


Index of economics articles - F

1 * Factor price equalization – Factors of production – Fair trade – Feminist

economics – Finance – Financial astrology – Financial capital –

Financial economics – Financial instrument – Fiscal policy – Fisher

equation – Fisher separation theorem – Forecasting – Fractional-reserve banking – Free good – Free rider

problem – Free trade – Friedman rule – Full-reserve banking


Colonization of Phobos - Objections

1 The fundamental problem of public things, needed for survival, such as

space programs, is the free rider problem


Inequity aversion - Punishing unjust success and game theory

1 Without IA's rejection of injustice, stable cooperation would be harder

to maintain (for instance, there would be more opportunities for

successful free rider problem|free riders).http://epub.ub.uni-muenchen.de/726/1/Fehr-Schmidt_Handbook_2005-

Munichecon.pdf


Microeconomics - Externalities and market failure

1 This period also marks the beginning of mathematical modeling of public

goods with Paul Samuelson|Samuelson's “The Pure Theory of

Public Expenditure” (1954), in it he gives a set of equations for efficient provision of public goods (he called

them collective consumption goods), now know as the Samuelson condition. He then gives a

description of what is know called the free rider problem:


Journal of Political Economy - Notable papers

1 :: ... suggested Tiebout model|non-political solutions to the free rider

problem in local governance.


Alternative compensation system

1 Other models, such as the street performer protocol or voluntary

collective licenses, could arguably be called alternative compensation systems although they are very

different and generally less effective at solving the free rider problem.


Lindahl tax - Demand revelation

1 The Demand Revelation theory uses the Clarke tax or pivot mechanism,

to ensure that individuals will consider the fact that their choices

have a social cost on the social outcome, thus ensuring that they

truthfully reveal their preferences,and hence overcoming

the free rider problem of public goods

provisioning.[http://www.progress.org/fold183.htm Fred Foldvary on

Demand Revelation: Better than Voting]


Affordable Care Act - Background

1 It was championed for a time by conservative economists and

Republican Party (United States)|Republican senators as a market-

based approach to healthcare reform on the basis of individual

responsibility and avoidance of free rider problems


Affordable Care Act - Healthcare debate, 2008–10

1 With universal health care|universal healthcare as one of the stated goals of the Obama

administration, congressional Democrats and health policy experts like Jonathan Gruber (economist)|Jonathan Gruber and David Cutler argued that

guaranteed issue would require both community rating and an individual mandate to ensure that adverse selection and/or Free rider problem|free

riding would not result in an Death spiral (insurance)|insurance death spiral; they convinced

Obama that this was necessary, and persuaded him to accept congressional proposals that included a

mandate


Affordable Care Act - Insurance exchanges and the individual mandate

1 These regulations are enabled to function due to the #Overview of

provisions|individual mandate — the requirement to buy insurance or pay

a penalty—and the limits on open enrollment, without which healthy

people might Free rider problem|put-off insuring themselves until they got

sick


Moody's - 1970s to 2000

1 As well, the major agencies began charging the issuers of bonds as well as investors mdash; Moody's began doing this in 1970 mdash; thanks in part to a growing free rider problem related to the increasing availability

of inexpensive Photocopier|photocopy machines, and the

increased complexity of the financial markets


Opportunism - Game theory

1 Two classic cases discussed in game theory where opportunism is often involved are the free rider problem

and the prisoner's dilemma.Reinhard Bachmann and Akbar Zaheer (eds.),

Handbook of trust research


Credit rating agency - Post-depression era

1 In the late 1960s and 1970s, ratings were extended to commercial paper and Deposit

account|bank deposits. Also during that time, major agencies changed their business

model by beginning to charge bond issuers as well as investors. Reasons for this change included a growing free rider problem related to the increasing availability of inexpensive Photocopier|photocopy machines, and the

increased complexity of the financial markets.


Signalling theory - Costly signalling in hunting

1 2000Hawkes 1993 Instances that are particularly inconsistent with the delayed

reciprocity hypothesis are those in which a hunter shares his kill indiscriminately with

all members of a large group.Wiessner 1996 In these situations, the individuals sharing meat have no control over whether or not their generosity will be reciprocated, and Free rider problem|free riding becomes an

attractive strategy for those receiving meat


Right-to-work law - Opponents

1 This creates a free rider problem[http://www.ipspr.sc.edu/grs/SCCEP/Articles/interest_groups_in_south_carolin.htm The South Carolina

Governance Project— Interest Groups in South Carolina,] Center for

Governmental Services, Institute for Public Service and Policy Research,

University of South Carolina, Accessed July 6, 2007


Union shop - Canada

1 Rand went further to argue that the free rider problem undermines

workplace order by causing resentment between union and non-

union employees.Kaufman, p


Union security agreement - Rationale

1 ISBN 0-912051-02-7 There are alternative solutions to the free rider problem in labor

relations


Parable of the broken window - Defenses

1 One prominent example are public goods which are prone to the free

rider problem and hence are subject to their over or under production.


Squeeze out - Process

1 Hence the acquirer is able to capture almost all the value added from the

merger and, as in the leveraged buyout, is able to effectively

eliminate the free rider problem


Commercial use of copyleft works - Development

1 Thus avoiding a type of free rider problem.


The Federal Reserve Act - Implications and Impacts of the Federal Reserve Act

1 [http://www.jstor.org/stable/2601371 Origins of the Federal Reserve

System: International Incentives and the Domestic Free Rider Problem

International Organization, Winter, 1999] The absence of a central

banking structure in the U.S


Participatory economy - Critique of markets

1 Ambiguity over who has the property right, polluters or pollution victims, free rider

problems among multiple victims, and the transaction costs of forming and maintaining

an effective coalition of pollution victims, each of whom is affected to a small but unequal

degree, all combine to render market systems incapable of eliciting accurate information

from pollution victims about the damages they suffer, or acting upon that information even if

it were known.Robin Hahnel, (2004)


Advocacy groups - Benefits and incentives

1 Known as the free rider problem, it refers to the difficulty of obtaining members of a particular interest

group when the benefits are already reaped without membership


Minarchism - Ideology

1 Some minarchists support taxation on principle or see it as a Lesser of two evils principle|necessary evil to

address the free rider problem, while others believe it is morality|morally

wrong


Private defense agency - Financing of private defense agencies

1 Specifically, the free rider problem, in which people refuse to pay for

defense but instead rely on their neighbors to pay for defending the

community, is said to make it inevitable that it be financed by

taxes if an equitable allocation of costs is to be achieved


Free-market roads - Private roads can have no free riders, reducing congestion

1 The free rider problem has been cited by some proponents as a

reason for privatizing roads: since traffic congestion is the result of

excess demand for transportation infrastructure, it may be treated as

any other economic shortage - in this case, a shortage of roads, lanes,

exits, or other infrastructure


The Logic of Collective Action - Overview

1 The book argues instead that individuals in any group attempting collective action will have incentives to Free rider problem|free ride on the

efforts of others if the group is working to provide public goods. Individuals will not “free ride” in

groups which provide benefits only to active participants.


Vaccination policy - Individual versus group goals

1 Governments often allow exemptions to mandatory vaccination for

religious or philosophical reasons, but if too many of these exemptions are granted, the resulting free rider

problem may cause loss of herd immunity, substantially increasing

risks even to vaccinated individuals.


Health care in the United States - Prescription drug prices

1 position (consistent with the primary lobbying position of the

Pharmaceutical Research and Manufacturers of America) is that the

governments of such countries are free rider problem|free riding on the

backs of U.S


Communications Workers of America v. Beck - Further Supreme Court rulings

1 Writing for the majority, Justice Blackmun established a three-prong test for

determining the constitutionality and statutory legality of agency fee charges in public employee bargaining units: 1) The charges must be germane to collective

bargaining activity; 2) The charges must not significantly burden the non-members' free

speech rights; and 3) Charges must be justified by the need for labor peace or to

avoid the free rider problem.Lehnert v


AUSFTA - Pharmaceutical Benefits Scheme

1 While the scheme is very effective at keeping many drug prices low, pharmaceutical

corporations in both the US and Australia are wary of the operation of the scheme, since

they argue that higher drug prices are necessary to fund the costs of research and development. The American pharmaceutical companies claim that in enjoying low-cost medicines, Australians are essentially Free

rider problem|free riding on the costs of research performed in the U.S.


Americans with Disabilities Act - Abuse

1 As one law review article pointed out, the perception that the ADA primarily helps free rider problem|freeloaders

was harshly satirized by The Onion in 1998 in the form of an article about

the Americans With No Abilities Act.Gina M


Balance of power (international relations) - Buck passing and bloodletting

1 Some realists believe there is a strong tendency to buck-pass or Free rider

problem|free-ride within balancing coalitions themselves, usually leaving their alliance partners to assume the heavy burden of

wearing down the enemy, leaving the free-rider’s military fresh to win the final battles

of the war and thus be in a better position to dictate the peace, such as the UK’s light involvement in the early stages of World

WarIhttps://store.theartofservice.com/the-free-rider-problem-toolkit.html

TANSTAAFL - Meanings

1 (See Free rider problem and Tragedy of the commons.)


Co-operation (evolution) - Direct Fitness Benefits

1 Cooperation is maintained in situations where Free rider problem|

free-riding is a problem through enforcement, which is the

mechanism where the actor is rewarded for cooperating or punished for not cooperating


FELDA - Scheme management

1 However, the settlers did not prefer this scheme, as workers who did not

tend to the land properly still benefited (a sort of free rider

problem)


Fallacy of composition - Examples

1 In the free rider problem, an individual can benefit by failing to pay when consuming a share of a public good; but if there are too

many such free riders, eventually there will be no ride for anyone.


Net bias - Concerns about political discrimination

1 Many ISPs contend that major content providers such as Google or Yahoo! enjoy a Free rider problem|

free ride


Public goods game - Results

1 Depending on the experiment's design, those who contribute below

average or nothing are called defectors or free rider problem|free

riders, as opposed to the contributors or above average contributors who are called cooperation|cooperators.


Public goods game - Income variation

1 A public goods games variant suggested as an improvement for researching the

free rider problem is one in which endowment are earned as Household

income|income. The standard game (with a fixed initial endowments) allows no

work effort variation and cannot capture the Marginal rate of substitution|marginal

substitutions among three factors: private goods, public goods, and leisure.


Public goods game - Implications

1 Part of the economic theory of public goods is that they would be under-provided (at a rate lower than the

‘social optimum’) because individuals had no private motive to contribute

(the free rider problem|free rider problem)


Social loafing

1 Social loafing can be explained by the free rider problem|free-rider theory and the resulting sucker effect, which is an individual’s

reduction in effort in order to avoid pulling the weight of a fellow group

member.


Social loafing - Motivational strategies

1 'Minimize free riding:' Free rider problem|Free riding occurs when

members do less than their share of the work because others will make

up for their slack


WTO - Principles of the trading system

1 # 'Reciprocity'. It reflects both a desire to limit the scope of Free rider problem|free-

riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateralism|unilateral liberalization;

reciprocal concessions intend to ensure that such gains will materialise.B. Hoekman, The

WTO: Functions and Basic Principles, 43


Economics of climate change mitigation - Heterogeneity

1 Nations that avoid mitigation can benefit from free rider problem|free-riding on the actions of others, and

may even enjoy gains in trade and/or investment (Halsnæs et al.,

2007:127)


Leech (computing)

1 In computing and specifically Internet, a 'leech' is one who

benefits, usually deliberately, from others' information or effort but does not offer anything in return, or makes only token offerings in an attempt to

avoid being called a leech. In economics, this type of behavior is called free riding and is associated

with the free rider problem.https://store.theartofservice.com/the-free-rider-problem-toolkit.html

Solidarity lending - Distinctiveness

1 * small enough to ensure a maximum level of joint responsibility and

discourage free rider problem|free riders, and


Signalling (economics) - Assumptions and groundwork

1 Bad employees aren't upset about this, because they get a free rider

problem|free ride from the hard work of the good employees


Eurobonds

1 Because Eurobonds would allow already highly indebted states access

to cheaper credit thanks to the strength of other Eurozone

economies, they are controversial, and may suffer from the free rider

problem.


Eurobonds - Critics

1 The planned introduction of Eurobonds has been criticised by economists for economic reasons

such as the Free rider problem or Moral Hazard.[http://www.voxeu.org/index.php?q=node/6899 voxeu.org] Beside economic grounds, mainly

legal and political reasons are mentioned which could prohibit the introduction of Eurobonds:

Article 125 of the Lisbon Treaty states explicitly that the European Union and its member states

are not liable for the commitments of other members


History of citizenship - Civic-republican view

1 A general problem with this conception, according to critics, is

that if this model is implemented, it may bring about other issues such as the free rider problem in which some

people neglect basic citizenship duties and consequently get a free ride supported by the citizenship

efforts of others


Rodney Stark - On the growth of Christianity

1 This is consistent with Stark's published observations of

contemporary religious movements, where once-successful faith

movements gradually decline in fervor due to the free rider problem.


Financial core - Impact

1 Opponents of the decision to declare financial core status note that it weakens the union which

won the benefits enjoyed by all workers, even those not bound by union rules. Some claim

that financial core members are essentially free rider problem|free riders. However, fi-core

workers still pay the majority of union dues; for example, the Financial Core Status deduction for

non-members of the Writers Guild of America, West over April 2013–March 2014 was 12.10%

less than the regular dues.


Vaccine controversy - Individual liberty

1 Exempting some people from mandatory vaccination results in a free rider problem, in which a few individuals gain the advantage of herd immunity without paying the cost; too many exemptions may

cause loss of herd immunity, substantially increasing risks even to

vaccinated individuals.


Box-Office Bunny - Plot

1 The would-be Free rider problem|free rider stumbles on the usher, Elmer.

To divert attention from his own illegal entry, Daffy drives Elmer to further focus on Bugs. He also join

forces with him against Bugs.


For More Information, Visit:

• https://store.theartofservice.com/the-free-rider-problem-toolkit.html

The Art of Servicehttps://store.theartofservice.com






Documents

Free Rider Problem