REMEMBERING PROFESSOR MANCUR OLSON

Professor Olson’s first lecture, predictably, was on the logic of collective action, and he talked about the formation and behavior of interest groups in the light of their economic interests. An interest group arises when the benefits it can derive by taking collective action outweigh the cost of taking that action. The cost, in turn, is shared among the members of that interest group. In a small group, members are able to observe the actions and behavior of one another. If one member refuses to pay his share of the cost, it will have a negative impact on other members and might even undermine the group’s collective action. Therefore, members participating in small interest groups are usually obliged to pay their share of the cost in order to continue engaging in collective actions. As a group grows in size, however, it becomes increasingly easy for members to enjoy a free-ride. From the perspective of an individual in a large group who pays a tiny fraction of the total cost, it might appear that the group’s collective actions could continue even if he or she defaults on paying their share – as long as other members continue to pay theirs. So individuals in large groups might be tempted to benefit from their group’s collective actions without paying towards the cost. But once the number of these selfishly inclined members increase, it becomes impossible for the group to support itself and its actions.