Social Choice and Welfare

, 32:197

Moral hazard and free riding in collective action

Original Paper

DOI: 10.1007/s00355-008-0318-8

Cite this article as:
Anesi, V. Soc Choice Welf (2009) 32: 197. doi:10.1007/s00355-008-0318-8


Most political and economic theorists point to moral hazard in teams as the main obstacle to lobbies’ collective action. In this paper, we address this important issue with a coalition-formation game. In the process of doing so, we characterize equilibrium lobby structures both in the absence and in the presence of moral hazard. Three notable results emerge from such an exercise: (1) an equilibrium lobby structure exists under both specifications of the model, (2) moral hazard in teams may raise large groups’ equilibrium lobby size, and (3) it may also raise the level of collective action of large groups with low organizational costs.

Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.School of EconomicsUniversity of NottinghamNottinghamUK