Why do individual incentives sabotage production of public goods?
- A collective action problem is a large-scale version of the prisoner’s dilemma.
- No one wants to produce the public good because it is costly and the benefits go to everyone.
- Thus, individuals free ride—they do not produce the good in the hope that someone else will.
- Ultimately, parties are considerably worse off than if they could credibly agree to produce the good despite its costs.