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Right to Work Laws
Prohibit union security agreements - contracts requiring workers to join the union and pay membership dues. Rather than provide a guarantee of employment to people seeking work. Allowing workers to opt out of paying costs of union representation.
Coordination Problems, Prisoner’s Dilemma
What are the two collective action problems?
Coordination Problems
more people = more problems
Can delegate to a leader (House of Rep. vs Senate)
Prisoner’s Dilemma
Individuals who benefit from cooperating with each other, but have a powerful incentive to break the agreement and exploit the other side.
Free Riding
A form of the prisoner’s dilemma that afflicts large groups. To defect from the agreement by withholding their contribution to the group’s undertaking while enjoying the benefits of the collective effort.
Tragedy of the Commons
Provision of a public good is divorced from its consumption. Costless consumption of a public good (commons) resulting in its ruination.
participants
Collective action offers ____ benefits they cannot achieve on their own.
- may require substantial cost (taxes)
Transaction costs, conformity costs
What are two costs for designing institutions for collective action?
Transaction Costs
time, effort, and resources required to compare preferences and make collective decisions. They increase when the number of participants rise.
more difficult
Transaction costs may be used intentionally to make some collective activities ___
- Ex: Framers and the high transaction costs for making constitutional changes.
Conformity Costs
The difference between what any one party prefers and what the collective body requires. The extent to which a collective decision obligates participants to do something they prefer not to.
- Ex: paying one’s property taxes
minimize
Institutions that ___ transaction costs tend to impose excessive conformity costs and vice versa.
Higher transaction costs (require consensus to make collective decisions, Bill of Rights, veto, House, Senate, SC)
How to solve the government intruding too far into your private life?
Minimize transaction costs (Commander-in-Chief and executive power
How to get a quick response, such as defense against foreign threat?
