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Free-Rider Problem and Sovereignty Protection

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  • Hitoshi Matsushima

Abstract

This study investigates a free-rider problem in long-term relationships, where, due to its non-excludable nature, each player attempts to seek loopholes to impose the burden of cooperation on other players. The players establish a committee that demands that each player select an action as promised by a pre-set commitment rule, contingent on all players' announcements. We require the committee to protect player sovereignty in that no player is forced to carry out high cooperation levels against their will or receive future retaliation from the other players for their low commitment. We demonstrate a method called the cautious commitment rule, according to which the committee makes each player a promise that is not necessarily the same as, but close to, and not greater than, their announced upper limit. We show that by adopting this rule, the committee can solve the entire free-rider problem while adhering to sovereignty protection and rule sustainability. As an application, we investigate global warming and show that adopting the cautious commitment rule is crucial for solving the tragedy of the global commons that all countries in the world have long faced.

Suggested Citation

  • Hitoshi Matsushima, 2022. "Free-Rider Problem and Sovereignty Protection," TUPD Discussion Papers 20, Graduate School of Economics and Management, Tohoku University.
    • Handle: RePEc:toh:tupdaa:20
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    File URL: http://hdl.handle.net/10097/00135207
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