Publication Type: Proceeding
Abstract: Mancur Olson in “The Logic of Collective Action” presents an analysis of the freerider problem faced by groups that provide a public good. His analysis is explicitly limited to the collective action problem in economic interest groups, such as unions and business associations. Olson specifically notes that his analysis does not apply to philanthropic organizations. In recent years, Walker (1991) and others have documented a substantial growth in what are called public interest groups, such as Greenpeace, Amnesty International and Common Cause. These public interest groups are examples of Olson’s philanthropic groups because their goal is helping others or society in general, rather than solely benefitting the members of the group.
I propose an explanation of how public interest groups solve their collective action problem by modifying Olson’s analysis. First, I modify the underlying rational, self-interested axiom by incorporating weak altruistic motives to individuals. Second, I analyze the game as one of incomplete information. Third, benefit provided is not the traditional public good, rather it is a “bi-public good.”
I incorporate these three features into a formal model of voluntary contributions to the provision of a public good. I show that a Bayes-Nash equilibrium exists which provides for positive contributions to the public good. My solution is different from that of Ainsworth and Sened (1993) who analyze the collective action problem of interest groups by modeling it as a signaling game with an entrepreneur. Their model is based upon Palfrey and Rosenthal’s (1984, 1988) analysis of the voluntary provision of a discrete, public good. However, Ainsworth and Sened’s analysis applies only where there are no competing interest groups (a rarity in the political process). My analysis explicitly models the provision of a “bi-public good” when there are competing interest groups over a good that is simultaneously good and bad for different groups.
In the second half of the analysis, I test the theoretical model. I use the 2004 GSS analysis of altruism as the instrument for my tests. I find strong support for the hypothesis. Membership in economic groups is not correlated with altruism, i.e., selective benefits are sufficient. But, membership in groups advocating social or political causes is correlated with altruistic motivation. In addition, contributing of money to social and political causes is correlated with altruistic behavior.