View source for Philosophy:Free-rider problem

{{Short description|Market failure benefitting non-paying users}}
In the social sciences, the '''free-rider problem''' is a type of [[Finance:Market failure|market failure]] that occurs when those who benefit from resources, [[Finance:Public good (economics)|public good]]s and common pool resources do not pay for them<ref name=Baumol>{{cite book |last=Baumol |first=William |title=Welfare Economics and the Theory of the State |year=1952 |publisher=Harvard University Press |location=Cambridge, Massachusetts}}</ref> or under-pay. Examples of such goods are public roads or public libraries or services or other goods of a communal nature. Free riders are a problem for common pool resources because they may overuse it by not paying for the good (either directly through fees or tolls or indirectly through taxes). Consequently, the common pool resource may be under-produced, overused, or degraded.<ref>Rittenberg and Tregarthen. ''Principles of Microeconomics'', [http://www.saylor.org/site/wp-content/uploads/2012/06/ECON101-3.2.pdf Chapter 6, Section 4. p. 2] {{Webarchive|url=https://web.archive.org/web/20130319152336/http://www.saylor.org/site/wp-content/uploads/2012/06/ECON101-3.2.pdf |date=19 March 2013 }}. Retrieved 20 June 2012</ref> Additionally, it has been shown that despite evidence that people tend to be cooperative by nature (a prosocial behaviour), the presence of free-riders causes cooperation to deteriorate, perpetuating the free-rider problem.<ref>Choi, T & Robertson, P. Contributors and Free-Riders in Collaborative Governance: A Computational Exploration of Social Motivation and Its Effects [https://academic.oup.com/jpart/article/29/3/394/5168276], Journal Of Public Administration Research and Theory, 29(3), 394-413. doi:10.1093/jopart/muy068</ref> 

The free-rider problem in social science is the question of how to limit free riding and its negative effects in these situations. Such an example is the free-rider problem of when property rights are not clearly defined and imposed.<ref>{{cite web |last1=Pasour Jr. |first1=E. C. |title=The Free Rider as a Basis for Government Intervention |url=https://direct.mises.org/journals/jls/5_4/5_4_6.pdf |publisher=Libertarian Studies |access-date=2014-10-25 |date=2014-07-30 |archive-date=2014-10-28 |archive-url=https://web.archive.org/web/20141028195146/https://direct.mises.org/journals/jls/5_4/5_4_6.pdf |url-status=dead }}</ref> The free-rider problem is common with [[Finance:Public good (economics)|public goods]] which are non-excludable and non-rivalrous. Non-excludable means that non-payers cannot be stopped from getting use of or benefits from the good. Non-rival consumption stipulates that the use of a good or service by one consumer does not reduce its availability for another consumer. These characteristics of a public good result in there being little incentive for consumers to contribute to a collective resource as they enjoy its benefits.{{According to whom|date=August 2021}}

A free rider may enjoy a non-excludable and non-rivalrous good such as a government-provided road system without contributing to paying for it. Another example is if a coastal town builds a lighthouse, ships from many regions and countries will benefit from it, even though they are not contributing to its costs, and are thus "free riding" on the navigation aid. A third example of non-excludable and non-rivalrous consumption would be a crowd watching fireworks. The number of viewers, whether they paid for the entertainment or not, does not diminish the fireworks as a resource. In each of these examples, the cost of excluding non-payers would be prohibitive, while the collective consumption of the resource does not decrease how much is available.{{Fact|date=August 2021}}

Although the term "free rider" was first used in economic theory of public goods, similar concepts have been applied to other contexts, including [[Social:Collective bargaining|collective bargaining]], antitrust law, psychology, political science, and [[Biology:Vaccine|vaccine]]s.<ref>{{Cite journal |last=Hendriks |first=Carolyn M. |date=December 2006 |title=When the Forum Meets Interest Politics: Strategic Uses of Public Deliberation |journal=Politics & Society  |volume=34 |issue=4 |pages=571–602 |doi=10.1177/0032329206293641|s2cid=144875493 }}</ref><ref>{{cite journal |last1=Ibuka |first1=Yoko |last2=Li |first2=Meng |last3=Vietri |first3=Jeffrey |last4=Chapman |first4=Gretchen B |last5=Galvani |first5=Alison P |title=Free-riding behavior in vaccination decisions: an experimental study |journal=PLOS ONE |date=24 January 2014 |volume=9 |issue=3 |pages=e87164 |doi=10.1371/journal.pone.0087164 |pmid=24475246 |pmc=3901764 |bibcode=2014PLoSO...987164I |doi-access=free }}</ref> For example, some individuals in a team or community may reduce their contributions or performance if they believe that one or more other members of the group may free ride.<ref>Ruël, Gwenny Ch.; Bastiaans, Nienke and Nauta, Aukje. [http://som.eldoc.ub.rug.nl/FILES/reports/themeA/2003/03A42/03a42.pdf "Free-riding and team performance in project education"] {{Webarchive|url=https://web.archive.org/web/20130602145757/http://som.eldoc.ub.rug.nl/FILES/reports/themeA/2003/03A42/03a42.pdf |date=2013-06-02 }}</ref>

The economic free-rider problem is equally pertinent within the realm of global politics, often presenting challenges in international cooperation and collective action. In global politics, states are confronted with scenarios where certain actors reap the benefits of collective goods or actions without bearing the costs or contributing to the efforts required to achieve these shared objectives. This phenomenon creates imbalances and hampers cooperative endeavors, particularly in addressing transnational challenges like climate change, global security, or humanitarian crises. For instance, in discussions on climate change mitigation, countries with lesser contributions to greenhouse gas emissions might still benefit from global efforts to reduce emissions, enjoying a stable climate without proportionally shouldering the costs of emission reductions. This creates a disparity between states' contributions and their gains, leading to challenges in negotiating and implementing effective international agreements.The economic free-rider problem's manifestation in global politics underscores the complexities and obstacles encountered in fostering collective action and equitable burden-sharing among nations to address pressing global issues.<ref>AHNLID, ANDERS. “Free or Forced Riders? Small States in the International Political Economy: The Example of Sweden.” Cooperation and Conflict, vol. 27, no. 3, 1992, pp. 241–76. JSTOR, [http://www.jstor.org/stable/45083885].</ref>

==Incentive==
The underlying incentive which generates the free-rider problem can be explained{{weasel inline|date=August 2021}} via the application of the [[Philosophy:Prisoner's dilemma|Prisoner's dilemma]],<ref>Stanford Encyclopedia of Philosophy, "Free Rider Problem", section 1: "The Logic of Collective Action". [https://plato.stanford.edu/entries/free-rider/#LogColAct]</ref> within the context of contributing to a public good. Suppose two people were to split a contribution to a public service (such as for a police station) with society benefiting from their contribution. According to the Prisoner's dilemma, certain conclusions can be drawn from the results of this scenario. If both parties donate, they are out of pocket and society benefits. If one party doesn't pay (in the hopes that someone else will) they become a free-rider, and the other will have to cover the cost. If the other party also decides to become a free-rider and neither pay, then society receives no benefit. This demonstrates{{disputed inline|date=August 2021}} that the free-rider problem is generated by individuals' willingness to let others pay when they themselves can receive the benefit at zero cost.<ref>Hardin, R. (2003). The Free Rider Problem (Stanford Encyclopedia of Philosophy) [https://plato.stanford.edu/entries/free-rider/#:~:text=The%20free%20rider%20problem%20is,one%20can%20receive%20it%20without]</ref> This is reinforced by the economic theory of [[Finance:Rational choice theory|rational choice]], stating that humans make choices which provide them with the greatest benefit. Therefore, if a service or resource is offered for free, then a consumer will not pay for it.<ref>Albanese, R & Van Felet, D (1985) Rational Behaviour in Groups: The Free-Riding Tendency. The academy of Management Review, 10 (2), 244</ref>

== Economic issues ==
Free riding is a problem of [[Pareto efficiency|economic inefficiency]] when it leads to the underproduction or overconsumption of a good. For example, when people are asked how much they value a particular [[Finance:Public good (economics)|public good]], with that value measured in terms of how much money they would be willing to pay, their tendency is to under-report their valuations.<ref name="Economics and the Environment">{{cite book |last1=Goodstein |first1=Eban |title=Economics and the Environment |date=2014 |publisher=Library of Congress |location=University of Minnesota |isbn=978-1-118-53972-9 |edition=7}}</ref> Goods that are subject to free riding are usually characterized by: the inability to exclude non-payers, its consumption by an individual does not impact the availability for others and that the resource in question must be produced and/or maintained. Indeed, if non-payers can be excluded by some mechanism, the good may be transformed into a club good (e.g. if an overused, congested public road is converted to a toll road, or if a free public museum turns into a private, admission fee-charging museum). 

Free riders become a problem when non-excludable goods are also rivalrous. These goods, categorized as common-pool resources,are characterized by overconsumption when common property regimes are not implemented.<ref name="Understanding Institutional Diversity">{{cite book |last1=Ostrom |first1=Elinor |title=Understanding Institutional Diversity |date=2009|publisher=Princeton University Press}}</ref> Not only can consumers of common-property goods benefit without payment, but consumption by one imposes an [[Finance:Opportunity cost|opportunity cost]] on others. The theory of '[[Tragedy of the commons]]' highlights this, in which each consumer acts to maximize their own utility and thereby relies on others to cut back their own consumption. This will lead to overconsumption and even possibly exhaustion or destruction of the good. If too many people start to free ride, a system or service will eventually not have enough resources to operate. Free-riding is experienced when the production of goods does not consider the [[Finance:Externality|external costs]], particularly the use of [[Biology:Ecosystem services|ecosystem services]].

An example of this is global climate change initiatives. As climate change is a global issue and there is no global regime to manage the climate, the benefits of reduced emissions in one country will extend beyond their own countries' borders and impact countries worldwide. However, this has resulted in some countries acting in their own self-interest, limiting their own efforts and free-riding on the work of others. In some countries, citizens and governments do not wish to contribute to the associated  effort and costs of mitigation, as they are able to free-ride on the efforts of others.{{Fact|date=August 2021}} This free rider problem also raises questions in regards to the fairness and ethicalness of these practices, as countries most likely to suffer the [[Biology:Effects of climate change|consequences of climate change]], are also those who typically emit the least greenhouse gases and have fewer economic resources to contribute to the efforts, such as the small island country of Tuvalu.<ref>Climate Leadership Council (2020), 'Why Climate Progress is Deadlocked'</ref>{{full citation needed|date=August 2021}}

Theodore Groves and John Ledyard believe that Pareto-optimal allocation of resources in relation to public goods is not compatible with the fundamental incentives belonging to individuals.<ref>{{cite journal |last1=Groves |first1=Theodore |last2=Ledyard |first2=John |title=Optimal Allocation of Public Goods: A Solution to the "Free-Rider" Problem |journal=Econometrica |date=May 1977 |volume=45 |issue=4|pages=783 |doi=10.2307/1912672 |jstor=1912672 |url=http://www.kellogg.northwestern.edu/research/math/papers/144.pdf }}</ref> Therefore, the free-rider problem, according to most scholars, is expected to be an ongoing public issue.{{Fact|date=August 2021}} For example, Albert O. Hirschman believed that the free-rider problem is a cyclical one for capitalist economies. Hirschman considers the free-rider problem to be related to the shifting interests of people. When stress levels rise on individuals in the workplace and many fear losing their employment, they devote less of their [[Social:Human capital|human capital]] to the public sphere. When public needs then increase, disenchanted consumers become more interested in [[Social:Collective action|collective action]] projects. This leads individuals to organize themselves in various groups and the results are attempts to solve public problems. In effect this reverses the momentum of free riding. Activities often seen as costs in models focused on self-interest are instead seen as benefits for the individuals who were previously dissatisfied consumers seeking their private interests.{{Fact|date=August 2021}}

This cycle will reset itself because as individuals' work for public benefit becomes less praiseworthy, supporters' level of commitment to collective action projects will decrease. With the decrease in support, many will return to private interests, which with time resets the cycle.{{Fact|date=August 2021}} Supporters of Hirschman's model insist that the important factor in motivating people is that they are compelled by a leader's call to [[Philosophy:Altruism|altruism]]. In [[Biography:John F. Kennedy|John F. Kennedy]]'s inaugural address he implored the American people to "ask not what your country can do for you; ask what you can do for your country." Some economists (for example, [[Biography:Milton Friedman|Milton Friedman]]) find these calls to altruism to be nonsensical. Scholars like Friedman do not think the free-rider problem is part of an unchangeable [[Finance:Virtuous circle and vicious circle|virtuous or vicious circle]], but instead seek possible solutions or attempts at improvement elsewhere.<ref>{{cite news |last1=Frank |first1=Robert H. |title=When Self-Interest Isn't Everything |url=https://www.nytimes.com/2008/02/10/business/10view.html |access-date=29 April 2019 |newspaper=The New York Times |date=February 10, 2008}}</ref>

== Economic and political solutions ==
=== Assurance contracts ===
{{Main|Finance:Assurance contract}}

An assurance contract is a contract in which participants make a binding pledge to contribute to building a public good, contingent on a quorum of a predetermined size being reached.  Otherwise the good is not provided and any monetary contributions are refunded.{{Fact|date=August 2021}}

A [[Finance:Assurance contract#Variants|dominant assurance contract]] is a variation in which an entrepreneur creates the contract and refunds the initial pledge plus an additional sum of money if the quorum is not reached. The entrepreneur profits by collecting a fee if the quorum is reached and the good is provided. In [[Game theory|game-theoretic]] terms this makes pledging to build the public good a dominant strategy: the best move is to pledge to the contract regardless of the actions of others.<ref>{{Cite web |url=http://mason.gmu.edu/~atabarro/PrivateProvision.pdf |title={title} |access-date=16 October 2013 |archive-url=https://web.archive.org/web/20130112223855/http://mason.gmu.edu/~atabarro/PrivateProvision.pdf |archive-date=12 January 2013 |url-status=live |df=dmy-all }}</ref>

=== Coasian solution ===
A Coasian solution, named for the economist Ronald Coase, proposes that potential beneficiaries of a public good can negotiate to pool their resources and create it, based on each party's self-interested willingness to pay. His treatise, ''The Problem of Social Cost'' (1960), argued that if the [[Finance:Transaction cost|transaction cost]]s between potential beneficiaries of a public good are low—that it is easy for potential beneficiaries to find each other and organize pooling their resources based upon the good's value to each of them—that public goods could be produced without government action.<ref name=Coase1960>{{cite journal |last=Coase |first=Ronald |journal=Journal of Law and Economics |date=October 1960 |volume=3 |pages=1–44 |doi=10.1086/466560 |title=The Problem of Social Cost|s2cid=222331226 }}</ref>

Much later, Coase himself wrote that while what had become known as the Coase Theorem had explored the implications of zero-transaction costs, he had actually intended to use this construct as a stepping stone to understand the real world of positive transaction costs, corporations, legal systems and government actions:<ref>{{cite web |last=Fox |first=Glenn |title=The Real Coase Theorems |url=http://www.canadianjusticereviewboard.ca/archive-Dr._Glenn_Fox_on_The_Real_Coase_Theorems.pdf |website=Cato Journal 27, Fall 2007 |publisher=Cato Institute, Washington, D.C. |access-date=17 February 2014 |url-status=dead |archive-url=https://web.archive.org/web/20130723053515/http://www.canadianjusticereviewboard.ca/archive-Dr._Glenn_Fox_on_The_Real_Coase_Theorems.pdf |archive-date=23 July 2013}}</ref><ref name="Coase1988_1">{{cite book |last=Coase |first=Ronald |title=The Firm, the Market and the Law |year=1988 |publisher=University of Chicago Press |location=Chicago, Illinois |page=13}}</ref><blockquote>I examined what would happen in a world in which transaction costs were assumed to be zero. My aim in doing so was not to describe what life would be like in such a world but to provide a simple setting in which to develop the analysis and, what was even more important, to make clear the fundamental role which transaction costs do, and should, play in the fashioning of the institutions which make up the economic system.</blockquote>Coase also wrote:<blockquote>The world of zero transaction costs has often been described as a Coasian world. Nothing could be further from the truth. It is the world of modern economic theory, one which I was hoping to persuade economists to leave.  What I did in "The Problem of Social Cost" was simply to shed light on some of its properties. I argued in such a world the allocation of resources would be independent of the legal position, a result which Stigler dubbed the "Coase theorem".<ref name="Coase1988_2">{{cite book |title=The Firm, the Market and the Law |last=Coase |first=Ronald |publisher=University of Chicago Press |year=1988 |location=Chicago, Illinois |page=174}}</ref></blockquote>Thus, while Coase himself appears to have considered the "Coase theorem" and Coasian solutions as simplified constructs to ultimately consider the real 20th-century world of governments and laws and corporations, these concepts have become attached to a world where transaction costs were much lower, and government intervention would unquestionably be less necessary.

A minor alternative, especially for information goods, is for the producer to refuse to release a good to the public until payment to cover costs is met. Author [[Biography:Stephen King|Stephen King]], for instance, authored chapters of a new novel downloadable for free on his website while stating that he would not release subsequent chapters unless a certain amount of money was raised. Sometimes dubbed ''holding for ransom'', this method of public goods production is a modern application of the street performer protocol for public goods production. Unlike assurance contracts, its success relies largely on social norms to ensure (to some extent) that the threshold is reached and partial contributions are not wasted.{{Fact|date=August 2021}}{{original research inline|date=August 2021}}

One of the purest Coasian solutions today is the new phenomenon of Internet [[Crowdfunding|crowdfunding]].{{Fact|date=August 2021}} Here rules are enforced by computer algorithms and legal contracts as well as social pressure.  For example, on the Kickstarter site, each funder authorizes a credit card purchase to buy a new product or receive other promised benefits, but no money changes hands until the funding goal is met.<ref name=kick>{{cite web |title=Kickstarter FAQ |url=https://www.kickstarter.com/help/faq/kickstarter+basics?ref=faq_nav#Kick |access-date=17 February 2014 |archive-url=https://web.archive.org/web/20140226050118/https://www.kickstarter.com/help/faq/kickstarter+basics?ref=faq_nav#Kick |archive-date=26 February 2014 |url-status=live |df=dmy-all }}</ref>{{original research inline|date=August 2021}} Because automation and the Internet so reduce the transaction costs for pooling resources, project goals of only a few hundred dollars are frequently crowdfunded, far below the costs of soliciting traditional investors.{{original research inline|date=August 2021}}

=== Introducing an exclusion mechanism (club goods) ===
Another solution, which has evolved for information goods, is to introduce exclusion mechanisms which turn public goods into club goods. One well-known example is [[Copyright|copyright]] and [[Social:Patent|patent]] laws. These laws, which in the 20th century came to be called [[Social:Intellectual property|intellectual property]] laws, attempt to remove the natural non-excludability by prohibiting reproduction of the good. Although they can address the free rider problem, the downside of these laws is that they imply private monopoly power and thus are not Pareto-optimal.

For example, in the United States, the patent rights given to pharmaceutical companies encourage them to charge high prices (above [[Finance:Marginal cost|marginal cost]])<!--I'm hiding this, not removing it, just in case.{{Dubious|date=August 2011| reason=Patents encourage pharmaceutical research (which is absurdly expensive) by allowing companies to have some time to recuperate their losses via market monopoly.  If a company had to share the market immediately, they would be unlikely to recover the amount lost during research.  See "generic competition paradox", which shows that it is actually the loss of the patent that causes prices to skyrocket.}}--> and to advertise to convince patients to persuade their doctors to prescribe the drugs.{{Dubious|date=August 2011| reason= Advertising is done by companies that don't have patents, too.  The choice to advertise is completely unrelated to patents}}  Likewise, copyright provides an incentive for a publisher to act like The Dog in the Manger, taking older works out of print so as not to cannibalize revenue from the publisher's own new works. Examples from the entertainment industry include Walt Disney Studios Home Entertainment's "vault" sales practice. Examples from the computer software industry include [[Company:Microsoft|Microsoft]]'s decision to pull [[Software:Windows XP|Windows XP]] from the market in mid-2008 to drive revenue from the widely criticized [[Software:Windows Vista|Windows Vista]] operating system.{{citation needed|date=March 2021}}

The laws also end up encouraging patent and copyright owners to sue even mild imitators in court and to lobby for the extension of the term of the exclusive rights in a form of rent seeking. 

These problems with the club-good mechanism arise because the underlying [[Finance:Marginal cost|marginal cost]] of giving the good to more people is low or zero, but, because of the limits of [[Finance:Price discrimination|price discrimination]] those who are unwilling or unable to pay a profit-maximizing price do not gain access to the good. If the costs of the exclusion mechanism are not higher than the gain from the collaboration, club goods can emerge naturally. [[Biography:James M. Buchanan|James M. Buchanan]] showed in his seminal paper that clubs can be an efficient alternative to government interventions.<ref>James M. Buchanan (February 1965). "An Economic Theory of Clubs". Economica. 32 (125): 1–14. doi:10.2307/2552442. JSTOR 2552442.</ref> On the other hand, the inefficiencies and inequities of club goods exclusions sometimes cause potentially excludable club goods to be treated as public goods, and their production financed by some other mechanism. Examples of such "natural" club goods include [[Finance:Natural monopoly|natural monopolies]] with very high fixed costs, private golf courses, cinemas, cable television and social clubs. This explains why many such goods are often provided or subsidized by governments, co-operatives or volunteer associations, rather than being left to be supplied by profit-minded entrepreneurs. These goods are often known as ''social goods''. [[Biography:Joseph Schumpeter|Joseph Schumpeter]] claimed that the "excess profits", or profits over normal profit, generated by the copyright or patent monopoly will attract competitors that will make technological innovations and thereby end the monopoly. This is a continual process referred to as "Schumpeterian [[Finance:Creative destruction|creative destruction]]", and its applicability to different types of public goods is a source of some controversy. The supporters of the theory point to the case of Microsoft, for example, which has been increasing its prices (or lowering its products' quality), predicting that these practices will make increased market shares for Linux and Apple largely inevitable.{{Citation needed|date=May 2011}}

A nation can be seen as a "club" whose members are its citizens. Government would then be the manager of this club. This is further studied in the theory of the state.{{citation needed|date=January 2020}}

===Non-altruistic social sanctions (common property regimes)===
Often on the foundation of game theory, experimental literature suggests that free-riding situations can be improved without any state intervention by seeking to measure the effects of various forms of social sanctions. Peer-to-peer punishment, that is, when members sanction other members that do not contribute to the common pool resource by inflicting a cost on "free-riders", is considered sufficient to establish and maintain cooperation.<ref>{{cite journal |author1=Elinor Ostrom |author2=James Walker |author3=Roy Gardner |s2cid=155015135 |title=Covenants With and without a Sword: Self-Governance Is Possible |journal=American Political Science Review |date=June 1992 |volume=86 |issue=2 |pages=404–17 |doi=10.2307/1964229|jstor=1964229 }}</ref><ref>Fehr, E., & S. Gächter (2000) "Cooperation and Punishment in Public Goods Experiments"'', 90 American Economic Review'' 980.</ref> 

Social actions come at a cost to the punisher, which discourages individuals from taking action to punish the free-rider. Therefore, punishers often need to be rewarded for following through with their punishment for the resource to be effectively managed. Unlike a prisoner's dilemma where the prisoners are prohibited from communicating and strategizing, people can get together to form "common property regimes" in which the group weighs the costs and benefits of rewarding individuals for sanctioning free riders.<ref name="Understanding Institutional Diversity">{{cite book |last1=Ostrom |first1=Elinor |title=Understanding Institutional Diversity |date=2009|publisher=Princeton University Press}}</ref> So long as the benefits of preserving the resource outweigh the cost of communication and enforcement, members often compensate punishers for sanctioning free riders.<ref name="Governing the Commons">{{cite book |last1=Ostrom |first1=Elinor |title=Governing the Commons |date=1990 |publisher=Cambridge University Press| isbn= 0521405998}}</ref> While the outcome is not Pareto-optimal, as the group has the additional cost of paying for enforcement, it is often less costly than letting the resource deplete. In the limiting case, where the costs of bargaining and enforcement approach zero, the setup becomes Coasian as the solution approaches the Pareto-optimal solution. 

Both punishment and regulation by the state work relatively badly under imperfect information, where people cannot observe the behavior of others.<ref>{{cite journal |last1=Kristoffel Grechenig |first1=Nicklisch |last2=Thöni |first2=C. |year=2010 |title=Punishment despite reasonable doubt – a public goods experiment with sanctions under uncertainty |ssrn=1586775 |journal=Journal of Empirical Legal Studies |volume=7 |issue=4 |pages=847–67 |doi=10.1111/j.1740-1461.2010.01197.x|s2cid=41945226 |url=https://www.alexandria.unisg.ch/71109/1/GrechenigNicklischTh%C3%B6ni2010JELS%20Punishment%20Despite%20Reasonable%20Doubt-A%20Public%20Goods%20Experiment%20with%20Sanctions%20Under%20Uncertainty.pdf }}</ref>
<ref name="Governing the Commons">{{cite book |last1=Ostrom |first1=Elinor |title=Governing the Commons |date=1990 |publisher=Cambridge University Press| isbn= 0521405998}}</ref> Often common property regimes which members establish through bargaining have more information about the specific common pool resource which they are managing than outsiders. For this reason, and because common property regimes can avoid the principal-agent problem, the specific local knowledge within common property regimes typically enables them to outperform regulations designed by outside technical experts.<ref name="Governing the Commons">{{cite book |last1=Ostrom |first1=Elinor |title=Governing the Commons |date=1990 |publisher=Cambridge University Press| isbn= 0521405998}}</ref> Nevertheless, the best performance is typically achieved when people in common property regimes consult with governments and technical experts while deciding on the rules and design of their firm, thereby combining local and technical knowledge.<ref name="Governing the Commons">{{cite book |last1=Ostrom |first1=Elinor |title=Governing the Commons |date=1990 |publisher=Cambridge University Press| isbn= 0521405998}}</ref><ref name="Understanding Institutional Diversity">{{cite book |last1=Ostrom |first1=Elinor |title=Understanding Institutional Diversity |date=2009|publisher=Princeton University Press}}</ref>

== Altruistic solutions ==

=== Social norms ===
Psychologically, humans are fundamentally considered as free-riders by others only when benefits are consumed while contributions are withheld. Indicating that in all cultures free-riders are recognised, however, cultural differences exist in the degree of tolerance and how these people dealt with them.<ref>Delton, A., Cosmides, L., Guemo, M., Robertson, T., & Tooby, J. (2012) The Psychosemantics of Free Riding: Dissecting the Architecture of a Moral Concept. Journal of Personality and Social Psychology, 102 (6), 1252-1270</ref> The impact of [[Philosophy:Social norm|social norm]]s on the free-rider problem differs between cultural contexts, which may lead to a variance between results in research on the free-rider problem when applied cross-culturally. Social norms impact on privately and voluntarily provided public goods; however, is considered to have some level of effect on the problem in many contexts. Social sanctioning, for example, is a norm in and of itself that has a high degree of universality.<ref>{{cite journal |last1=Vyrastekova |first1=Jana |last2=Funaki |first2=Yukihiko |last3=Takeuchi |first3=Ai |title=Sanctioning as a social norm: Expectations of non-strategic sanctioning in public goods game experiment |journal=The Journal of Socio-Economics |volume=40 |issue=6 |pages=919–928 |date=2011 |doi=10.1016/j.socec.2011.08.020}}</ref> The goal of much research on the topic of social sanctioning and its effect on the free-rider problem is to explain the altruistic motivation that is observed in various societies.

Free riding is often thought of only in terms of positive and negative externalities felt by the public. The impact of social norms on actions and motivations related to [[Philosophy:Altruism|altruism]] are often underestimated in economic solutions and the models from which they are derived.<ref>{{cite journal |last1=Hustinx |first1=Lesley |last2=Cnaan |first2=R. A. |last3=Handy |first3=F. |title=Navigating theories of volunteering: A hybrid map for a complex phenomenon |journal=Journal for the Theory of Social Behaviour |date=2010 |volume=40 |issue=4 |pages=410–434 |doi=10.1111/j.1468-5914.2010.00439.x|url=https://biblio.ugent.be/publication/1100542 |hdl=1854/LU-1100542 |hdl-access=free }}</ref>

=== Altruistic social sanctions ===
While non-altruistic social sanctions occur when people establish common property regimes, people sometimes punish free-riders even without being rewarded. The exact nature of motivation remains to be explored.<ref>{{cite journal |last1=Fehr |first1=Ernst |last2=Gächter |first2=Simon |year=2002 |title=Altruistic punishment in humans |journal=Nature |volume=415 |issue=6868 |pages=137–40 |doi=10.1038/415137a|pmid=11805825 |bibcode=2002Natur.415..137F |s2cid=4310962 }}</ref> Whether costly punishment can explain cooperation is disputed.<ref>{{cite journal |last1=Dreber |first1=Anna |display-authors=0 |year=2008 |title=Winners don't punish |journal=Nature |volume=452 |issue=7185 |pages=348–51 |doi=10.1038/nature06723 |pmid=18354481 |pmc=2292414|bibcode=2008Natur.452..348D }}</ref> Recent research finds that costly punishment is less effective in real world environments. 

Other research finds that social sanctions cannot be generalized as strategic in the context of public goods. Preferences between secret sanctions (untraceable sanctions between players in the game) and standard sanctions (traceable sanctions including feedback between players in an otherwise identical environment) on free riders did not vary significantly. Rather some individuals preferred to sanction others regardless of secrecy.<ref>{{cite journal |last1=Vyrastekova |first1=Jana |last2=Funaki |first2=Yukihiko |last3=Takeuchi |first3=Ai |title=Sanctioning as a social norm: Expectations of non-strategic sanctioning in a public goods game experiment |journal=The Journal of Socio-Economics |volume=40 |issue=6 |pages=919–928 |date=2011 |doi=10.1016/j.socec.2011.08.020}}</ref> Other research build on the findings of [[Finance:Behavioral economics|behavioral economics]], finds that in a dilemmatic donation game, donators are motivated by the fear of loss. In the game donators' deposits were only refunded if the donators always punish free riding and non-commitment among other individuals. Pool-punishment (everyone loses their deposit if one donator doesn't punish the free rider) provided more stable results than punishment without consideration of the consensus of the group. Individual-to-individual peer punishment led to less consistently applied social sanctions.<ref>{{cite journal |last1=Sasaki |first1=Tatsuya |last2=Okada |first2=Isamu |last3=Uchida |first3=Satoshi |last4=Chen |first4=Xiaojie |title=Commitment to Cooperation and Peer Punishment: Its Evolution |journal=Games |date=2015 |volume=6 |issue=4 |pages=574–587 |doi=10.3390/g6040574|doi-access=free |hdl=10419/167960 |hdl-access=free }}</ref> Collectively this research, although it is experimental in nature, may prove useful when applied in public policy decisions seeking to improve free-rider problems within society.

==See also==
{{cols|colwidth=26em}}
* Common pool resource
* [[Finance:Economic surplus|Economic surplus]]
* Freedom Riders
* Forced rider
* [[Leech (computing)]]
* [[Finance:The Logic of Collective Action|The Logic of Collective Action]]
* [[Moral hazard]]
* Parasitism (social offense)
* [[Philosophy:Prisoner's dilemma|Prisoner's dilemma]]
* [[Tragedy of the commons]]
{{colend}}

==Notes==
{{Reflist}}

==Further reading==
* {{cite book |title=The Theory of Externalities, Public Goods and Club Goods |last=Cornes |first=Richard |author2=Sandler, Todd |year=1986 |publisher=Cambridge University Press |location=New York |isbn=052130184X }}
* William D. Nordhaus, "A New Solution:  the Climate Club" (a review of Gernot Wagner and Martin L. Weitzman, ''Climate Shock:  The Economic Consequences of a Hotter Planet'', Princeton University Press, 250 pp, $27.95), ''The New York Review of Books'', vol. LXII, no. 10 (June 4, 2015), pp.&nbsp;36–39.
* {{Cite journal |last=Venugopal |first=Joshi |year=2005 |title=Drug imports: the free-rider paradox |journal=Express Pharma Pulse |volume=11 |issue=9 |pages=8 }}
* P. Oliver – [https://web.archive.org/web/20160304201349/http://www.ssc.wisc.edu/~oliver/Soc626/Lectures/CollAct%20TheoryNew.pdf Sociology 626] published by [https://www.ssc.wisc.edu/sscc/ Social Science Computing Cooperative] University of Wisconsin


[[Category:Market failure]]
[[Category:Dilemmas]]

{{Sourceattribution|Free-rider problem}}