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A Tragic Solution to the Collective Action Problem: Implications for Corruption, Con?flict and Inequality

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  • Ricardo Nieva

    (Department of Economics, Universidad de Lima)

Abstract

We study the role of an enforcer in the effectiveness of selective incentives in solving the collective action problem when groups take part in a contest. Cost functions exhibit constant elasticity of marginal effort costs. If prize valuations are homogeneous, our source of heterogeneity induces full cost-sharing and the ?first-best individual contributions; further, the group probability of winning goes up. With heterogeneity in prize valuations, an increase in the effectiveness of the enforcer in confl?ict increases the group probability of winning only if the prize valuation of the enforcer is lower than de Lehmer mean of those of the other players; however, the induced partial cost sharing is not group efficient. If effectiveness "tends to infi?nity", the collective action problem is solved with partial cost-sharing if that prize valuation is not too low. Tragically, if productivity is low (if the prize is private in our set up) this occurs with corrupt coalitions which have been shown to form together with confl?ict and inequality endogenously; otherwise, this occurs with non corrupt coalitions. Further, even if such valuation is too low the group winning probability goes up. In this latter case, over cost-sharing yields group efficiency.

Suggested Citation

  • Ricardo Nieva, 2020. "A Tragic Solution to the Collective Action Problem: Implications for Corruption, Con?flict and Inequality," Working Papers 2020.04, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2020.04
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    References listed on IDEAS

    as
    1. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
    2. Ricardo Nieva, 2019. "Corruption and paradoxes in alliances," Economics of Governance, Springer, vol. 20(1), pages 41-71, March.
    3. Shmuel Nitzan & Kaoru Ueda, 2018. "Selective incentives and intragroup heterogeneity in collective contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(4), pages 477-498, August.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Heterogeneity; Corruption; Collective Contests; Inequality; Selective Incentives;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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