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Abstract:
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"Mancur Olson in The Logic of Collective Action presents an analysis of the free rider 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 incorporating two features not found in Olson's analysis. First, the public good provided by these groups is non-rival rather than rival as in the case of economic interest groups. Second, I modify the underlying rational, self interested axiom by introducing a modicum of altruism. Specifically, I show that pure altruism is required rather than warm-glow or a morally based notion of altruism. I incorporate these two features into a formal model of voluntary contributions to the provision of a public good. Furthermore, I assume that the game is one of incomplete information. I show that a Bayesian equilibrium exists which provides for positive contributions to the provision of a public good. My solution is fundamentally different from Chong (1991) and Sandler's (1993) assurance game, and prisoner's dilemma version of the collective action problem faced which relies upon a pure strategy solution to the problem and assumes complete information. Lastly, Cornes and Sandler (1996) propose a new size principle, the inverse of Olson's size principle. The larger the group, the easier it is to solve the collective action problem. I show that Olson's original size principle holds in the voluntary provision to public-interest groups."
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