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The Birth of Institutions - How Competitive Pressures Can Solve the Collective Action Problem

Year: 2011
Type: preprint
Abstract: I use the Tragedy of the Commons dilemma to analyze a core difficulty in explaining the emergence of dilemma-solving institutions:On the one hand, institutions must induce individuals to act differently than they would in the absence of the institution in question (or the institution would fail to have any impact).On the other hand however, individuals have no real incentive to engage in setting up a dilemma-solving institution (which will forseeably force them to act against their own preferences).Once a dilemma-solving institution has been successfully installed, individuals have per definitionem a strong incentive to both engage in dilemma-solving behavior as well as to support the institution in question. However, if such an institution doesn't exist yet, individuals have no incentive to either directly engage in dilemma-solving behavior, nor to engage in the process of institutional creation.Dilemma-solving institutions can indeed arise unproblematically if individuals possess a sufficient game-theoretic knowledge of their situation and if they can overcome the collective action problem. However, both of these conditions are unlikely to be met in practice - which makes it difficult to explain how dilemma-solving institutions could originally come into existence.My paper provides a more realistic explanation for how dilemma-solving institutions can arise: I present a model which demonstrates the conditions under which competitive pressures can lead populations of myopic actors to develop and maintain dilemma-solving patterns of behavior.In my model, competitive pressures (primarily through competition with neighboring populations) induce populations to harvest from their common resource pool in a sustainable manner - despite the fact that individuals always benefit from increasing their individual harvest.By demonstrating that competitive pressures can under some conditions suffice to establish dilemma-solving behavioral patterns, I defuse the difficulty of accounting for the existence of institutional solutions to social dilemmas in cases where individuals lack the ability to analyze their situation in game-theoretic terms and/or where they are incapable of overcoming the collective action problem: once competitive pressures have given rise to dilemma-solving behavioral patterns, it is straightforward to explain how societies have developed mechanisms to stabilize those behavioral patterns by means of formal institutions. Coercive institutions don't have to create the desired dilemma-solving behavior ex nihil, because competitive pressures can do the job.The existence of coercive institutions is much less mysterious if we account for the role of competitive pressures in their emergence: it is not the case that the coercive institution comes first and then the desired behavior follows, but rather the other way around.
Institution: Yale University
Language: English
Open Access status: green
OpenAlex ID: W1706470206
Cites: 41
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Related to: 10