Free Riders and Zealots: The Role of Social Networks

As is well known, the incentives for providing a public good are such that rational individuals will not provide it, or will provide it at a suboptimal level. Only a fraction of the benefits of a person's action accrue to that person. As a consequence, each, motivated only by the benefits accruing to him from his own action, will be unmoved both by the benefits his action provides to others and by the benefits others' actions provide to him. These incentives induce each to become a on the others' actions. When all are in such a situation, with no one for whom the benefits of his own action loom sufficiently large that he has an incentive to provide the public good on his own, then little or none will be provided by rational actors, as has been shown repeatedly in the literature. Overcoming free rider activity, or more generally activity involving external effects experienced by those other than the actor, involves organization of some sort, which in the case of exteralities is ordinarily described as internalizing externalities. In the case of public goods, this is ordinarily described as creating organization which will allocate the cost of providing the public good among those who experience its benefits. The particular way of allocating these costs is quite problematic, and has been discussed by a number of investigators, beginning with Eric Lindahl (1958 1919), continuing through Mancur Olson (1965), who pointed to exploitation of the large by the small, in which the large actors pay a disproportionately large share of the cost, and including the method of revealed preferences exposited by Tullock and others (Tideman and Tullock, 1976). But apart from this question of allocation, solution of the problem is ordinarily seen as involving organization in which individual members give over some rights to a collectivity which then uses these rights to enforce an allocation of costs of the public goods. All of the ideas which I have discussed above are by now so well recognized that we could express their central point as the conventional wisdom of the field: When a number of self-interested persons are interested in the same outcome which requires expenditure of effort by one or more to bring about, there will, in the absence of explicit organization, be a failure to bring about that outcome, although an appropriate allocation of effort would bring about that outcome, at a cost to each which was less than the benefits each experienced. Yet there are many empirical situations in which just the opposite of free rider activity seems to occur, although the circumstances are like those in which free riders would be predicted to abound. That is, there is an outcome in which a number of persons are in er sted, which requires effort on the part of one or more of the number. In some such