[net.politics.theory] Solution to Free Rider problem

radford@calgary.UUCP (Radford Neal) (12/31/85)

Frequently one sees postings in this group claiming that so-called
"Free Rider" problems require government intervention for their solution.
A typical situation:

     Residents of a river valley would all benefit from a dam upstream
     for flood control. But without the government taxing them to 
     pay for it, they will all wait for someone else to pay and hence
     the dam will never be built, to everyone's disadvantage.

We may distinguish two "bad" results from such situations:

    1) The dam is never built, even though the cost is less than the
       benefit.

    2) The dam is built, but its financing is "unfair". (E.g. half the
       people pay for it even though all benefit).

I propose a solution here which eliminates the first bad result and 
most of the second.

The dam gets built as follows:

    A promoter for the scheme defines the project and determines how 
    much it will cost. He establishes a trust fund to be used to
    fund the scheme. Anyone may donate money to the trust fund. No
    money is disbursed until the fund contains enough money to 
    complete the project. If enough money is not collected by some
    specified time, all money is given back to the contributors.

Some details:

    1) Provision could be made to compensate the promoter for his
       efforts out of the trust fund.

    2) Management of the project could be controlled by the contributors
       to the fund in whatever fashion the promoter defined initially.

    3) The "cost" of the dam could be estimated on the high side to 
       allow for contingincies and any excess refunded to the contributors.

    4) People wishing to contribute who don't have cash could borrow
       via usual channels.

    5) Refunds in the event of the project not going ahead would include
       interest. (The trust fund would be invested in some conservative
       fashion.)

Would people contribute? They would if they percieve the benefits as
actually exceeding the cost. If a resident thinks the dam is worth 1000 
dollars to him, he will rationally contribute up to that amount unless
he has a liquidity problem which financial institutions won't help him
with for some reason. (In that case, a 1000 dollar tax increase would
be disastrous for him.) If the dam never gets built he loses nothing;
if it does, he benefits.

Would people hold back in the hopes that the dam will be built using
other people's contributions, giving them the benefits for no cost?
Maybe, but they delay their benefits if they do. The longer the dam
goes unbuilt, the less likely it seems that they can get away with this
and the more likely they are to contribute what they think is "fair".

A possible disadvantage is that contributors might resent non-contributors
whom they thought benefitted. This sort of envy is not very rational, and
not very moral, but could cause ill-feeling anyway.

Some advantages absent from governmental schemes:

    1) People who truely don't benefit don't pay. (e.g. those who
       don't mind floods, don't think the dam will work, think it
       costs too much relative to the benefit for them).

    2) No coercion is required.

So: Any comments? Have I convinced those who didn't think this problem
could be solved in a libertarian context?

Note that I'm not attempting here to solve all problems with
building dams. In particular, I'm not addressing the "eminent domain"
problem concerning getting the land for it.

    Radford Neal

mmt@dciem.UUCP (Martin Taylor) (12/31/85)

>Frequently one sees postings in this group claiming that so-called
>"Free Rider" problems require government intervention for their solution.
>A typical situation:
>
>     Residents of a river valley would all benefit from a dam upstream
>     for flood control. But without the government taxing them to 
>     pay for it, they will all wait for someone else to pay and hence
>     the dam will never be built, to everyone's disadvantage.
>...
>I propose a solution here which eliminates the first bad result and 
>most of the second.
>
>The dam gets built as follows:
>
>    A promoter for the scheme defines the project and determines how 
>    much it will cost. He establishes a trust fund to be used to
>    fund the scheme. Anyone may donate money to the trust fund. No
>    money is disbursed until the fund contains enough money to 
>    complete the project. If enough money is not collected by some
>    specified time, all money is given back to the contributors.

I suppose, to be fair, that those who don't want the dam built are
allowed to take out of the trust fund an amount corresponding to the
damage they think it will cause them? (Of course, they would have to
give it back if the dam eventually was not built ... but that's something
for the grandchildren to worry about, isn't it?).

Do you really think anyone would contribute to such a crazy scheme?
If so, I think I will set up a "Dams for Saskatchewan" fund.  I could
do with an upgrade or two for my Mac!
-- 

Martin Taylor
{allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt
{uw-beaver,qucis,watmath}!utcsri!dciem!mmt

janw@inmet.UUCP (01/01/86)

[ Radford Neal radford@calgary]
>/* ---------- "Solution to Free Rider problem" ---------- */

Looks like a *general* solution ! Details could vary, of course - 
e.g., subscribers could send pledges instead of actual money,
but it should work for DEFENSE and everything else as well
(welfare, education, road repair, space exploration ...).
As soon as someone licks the crummy eminent domain problem
- which could never arise in 3 DIMENSIONS anyway - we
are ready for the *last* constitutional convention ! ( :-)?) .

tw8023@pyuxii.UUCP (T Wheeler) (01/02/86)

I just love the free rider solution.  I hope it goes into effect
soon because I am going to run around the country looking for
dam sites to start new projects.  I will find myself a top-notch
ad agency to plug the project so that the locals will be beating
down my door hoping to contribute to the trust fund.  As soon as
the fund reaches a sizable amount, I will drop the idea and
collect my reasonable fee for my troubles.  What a great way to
make money.  I won't have to bother with any construction or
such.

I'm amazed that the writer has not realized that in any dam building
situation, there are folks who would be living upstream from the
dam who would probably not be too excited about having their land
and homes inundated by a lake.  Take the situation of the Hartwell
Dam in South Carolina.  The damn cost many, many millions of dollars.
Yet, those who directly benefited with flood control and irrigation
and such, were only a few hundred.  To make that few people pay for
a giant damn, if it was going to benefit them, would have been
the ultimate of dumbness since 98% of those people were hovering
on the poverty borderline in the first place.

I just wish the netters who put forth these `pie-in-the-sky'
schemes would look at both sides of the story and use a little
logic.
T. C. Wheeler

radford@calgary.UUCP (Radford Neal) (01/03/86)

> 
> >Frequently one sees postings in this group claiming that so-called
> >"Free Rider" problems require government intervention for their solution.
> >A typical situation:
> >
> >     Residents of a river valley would all benefit from a dam upstream
> >     for flood control. But without the government taxing them to 
> >     pay for it, they will all wait for someone else to pay and hence
> >     the dam will never be built, to everyone's disadvantage.
> >...
> >I propose a solution here which eliminates the first bad result and 
> >most of the second.
> >
> >The dam gets built as follows:
> >
> >    A promoter for the scheme defines the project and determines how 
> >    much it will cost. He establishes a trust fund to be used to
> >    fund the scheme. Anyone may donate money to the trust fund. No
> >    money is disbursed until the fund contains enough money to 
> >    complete the project. If enough money is not collected by some
> >    specified time, all money is given back to the contributors.
> 
> I suppose, to be fair, that those who don't want the dam built are
> allowed to take out of the trust fund an amount corresponding to the
> damage they think it will cause them? (Of course, they would have to
> give it back if the dam eventually was not built ... but that's something
> for the grandchildren to worry about, isn't it?).

I was assuming in this illustrative example that everyone agreed that the
dam was a good idea, they just don't necessarily agree on *how* good it
is. If there are people harmed by the dam, buying their agreement to it
would be part of its cost.

> Do you really think anyone would contribute to such a crazy scheme?
> If so, I think I will set up a "Dams for Saskatchewan" fund.  I could
> do with an upgrade or two for my Mac!

Why do you think the scheme is crazy? The only argument you seem to be
giving is that implied by your last sentence. Do you really think it is
impossible to find reputable managers of such a trust fund?

> Martin Taylor

      Radford Neal

sykora@csd2.UUCP (Michael Sykora) (01/03/86)

>/* tw8023@pyuxii.UUCP (T Wheeler) /  8:44 am  Jan  2, 1986 */

>I just love the free rider solution.  I hope it goes into effect
>soon because I am going to run around the country looking for
>dam sites to start new projects.  I will find myself a top-notch
>ad agency to plug the project so that the locals will be beating
>down my door hoping to contribute to the trust fund.  As soon as
>the fund reaches a sizable amount, I will drop the idea and
>collect my reasonable fee for my troubles.  What a great way to
>make money.  I won't have to bother with any construction or
>such.

This is called fraud, and can be used in most commercial situations.
By and large governments commit it more often than businesses do, but it is
also more often legal when governments do it.  In any case, what makes
you so sure people will invest with a disingenuous swine like you?

>I'm amazed that the writer has not realized that in any dam building
>situation, there are folks who would be living upstream from the
>dam who would probably not be too excited about having their land
>and homes inundated by a lake.  Take the situation of the Hartwell
>Dam in South Carolina.  The damn cost many, many millions of dollars.
>Yet, those who directly benefited with flood control and irrigation
>and such, were only a few hundred.  To make that few people pay for
>a giant damn, if it was going to benefit them, would have been
>the ultimate of dumbness since 98% of those people were hovering
>on the poverty borderline in the first place.

If the damn would cause damage to the property of some then it should
be illegal for EITHER the private sector OR the government to build it.

>I just wish the netters who put forth these `pie-in-the-sky'
>schemes would look at both sides of the story and use a little
>logic.

I just wish the netters who put forth gratuitous insults would think twice --
they're so boring.

>T. C. Wheeler

Mike Sykora

sykora@csd2.UUCP (Michael Sykora) (01/03/86)

/* csd2:net.politics.theory / lkk@teddy.UUCP /  2:39 pm  Jan  2, 1986 */

>How many people do you know who are rational?

Well, we know of at least one that isn't.

>This is a major flaw in
>libertarian thinking, assuming rational agents.  People rationalize, but
>thats not the same thing, is it?

Every one makes decisions with some rationality.  One can often guess the
impact of the rationality on the outcome of the decision.  How does one
guess at the impact of the irrationality?

Everyone is capable of rational thinking to one extent or another, and
evryone is capable of growing in this direction.  Should we implement
policies that encourage people to grow in this direction or policies that
encourage people to grow away from it?  What do you suppose would be the
long term impact if we implement the latter?

>The biggest flaw in libertarian thinking is, however, the notion that
>people are independent free agents.  That one can exist in a societal 
>vacuum, just "minding one's business" and dealing with others only on a
>formal or informal contractual basis.  This sounds bad even in theory.

What PRECISELY do you mean by "independent free agents?"
Perhaps you can provide some justification for these claims.
What sort of criticism is "sounds bad?"

>In 
>practice, it doesn't come close to modeling real societies (except perhaps
>the "society" of net.land, which might explain the high number of libertarians
>around.)

Why are you around, Larry?

>>Some advantages absent from governmental schemes:
>>
>>    1) People who truely don't benefit don't pay. (e.g. those who
>>       don't mind floods, don't think the dam will work, think it
>>       costs too much relative to the benefit for them).

>How many people to you know who LIKE FLOODS?

Well, there used to be this guy called Noah . . .

>A statement like this 
>shows just how detached from reality libertarians are.  Nobody likes floods,
>yet some people won't pay.  How do you explain this and deal with it?

You're gonna get a heart attack if you keep jumping so far to conclusions.
It is not clear that he was postulating that there are people who like floods.
More likely, he was stating that if such people were involved, they wouldn't
have to pay for it, as an illustration of the fact that under such schemes,
whoever does not wish to participate  --  for whatever reason  --  doesn't
have to.

>Larry Kolodney     (INTERNET) lkk@mit-mc.arpa

Mike Sykora

radford@calgary.UUCP (Radford Neal) (01/06/86)

The following reply to my posting on the free-rider problem leaves me
almost speachless, but I'll try to respond anyway:

> I just love the free rider solution.  I hope it goes into effect
> soon because I am going to run around the country looking for
> dam sites to start new projects.  I will find myself a top-notch
> ad agency to plug the project so that the locals will be beating
> down my door hoping to contribute to the trust fund.  As soon as
> the fund reaches a sizable amount, I will drop the idea and
> collect my reasonable fee for my troubles.  What a great way to
> make money.  I won't have to bother with any construction or
> such.

Another netter raised much the same objection. *I* thought people would
object that no one would contribute to worthwhile projects organized this
way. That fraud of the above sort would be at all common seems to me to
be incredibly unlikely. We are talking about a *trust fund*, administered
by the most reputable financial institutions around. The promoter gets
money out only under whatever conditions are in the trust agreement. This
might include some support during the period before the required sum has
been raised, but if this amount was so large as to make it profitable for
a promoter to set up fake schemes no one would contribute (at least after
the newspapers found out).

The idea that a good ad campaign will convince people they need flood
control when there have been no floods in living memory is rather ludicrous.
We're talking about *their personal money* here, not *somebody else's 
money* like with current dam projects.

> I'm amazed that the writer has not realized that in any dam building
> situation, there are folks who would be living upstream from the
> dam who would probably not be too excited about having their land
> and homes inundated by a lake.  Take the situation of the Hartwell
> Dam in South Carolina.  The damn cost many, many millions of dollars.
> Yet, those who directly benefited with flood control and irrigation
> and such, were only a few hundred.  To make that few people pay for
> a giant damn, if it was going to benefit them, would have been
> the ultimate of dumbness since 98% of those people were hovering
> on the poverty borderline in the first place.

A quote from my original article:

    Note that I'm not attempting here to solve all problems with
    building dams. In particular, I'm not addressing the "eminent domain"
    problem concerning getting the land for it.

I'm not very interested in dams. I was addressing the general "free rider"
problem using dams as an illustrative example. 

I certainly have no intention of coming up with a scheme which would
finance all the dams currently being built. I've never heard of the Hartwell
dam, but if your information above is correct it clearly should never
have been built. Many millions of dollars to benefit a few hundred people?
Lets see, that works out to maybe 100,000 dollars a person? If these 
people were offered the option of $100,000 cash or a dam, which do you think
they would have taken? Right, the cash. Such projects get built only with
taxpayer's money because they aren't justifiable by any criterion other than
benefit to the politicians involved.

> I just wish the netters who put forth these `pie-in-the-sky'
> schemes would look at both sides of the story and use a little
> logic.
> T. C. Wheeler

This reply has certainly raised my conciousness of conservatism in the
net population. My proposal is not "pie-in-the-sky". It is a straight-forward
application of existing social structures to the free-rider problem. 
Does no one out there have any imagination?

     Radford Neal

radford@calgary.UUCP (Radford Neal) (01/06/86)

> In article <20@calgary.UUCP> radford@calgary.UUCP (Radford Neal) writes:
> 
> > [How to build a dam without coercive government interference]
> >
> >The dam gets built as follows:
> >
> >    A promoter for the scheme defines the project and determines how 
> >    much it will cost. He establishes a trust fund to be used to
> >    fund the scheme. Anyone may donate money to the trust fund. No
> >    money is disbursed until the fund contains enough money to 
> >    complete the project. If enough money is not collected by some
> >    specified time, all money is given back to the contributors.
> >
> >Would people contribute? They would if they percieve the benefits as
> >actually exceeding the cost. If a resident thinks the dam is worth 1000 
> >dollars to him, he will rationally contribute up to that amount...
> 
> How many people do you know who are rational?  This is a major flaw in
> libertarian thinking, assuming rational agents.  People rationalize, but
> thats not the same thing, is it?

People certainly are not always rational, but in evaluating a scheme like
this seeing what they rationally would do looks like a good start. You haven't
presented any reason to think people are subject to irrationalities 
relevant to this discussion.

> >Some advantages absent from governmental schemes:
> >
> >    1) People who truely don't benefit don't pay. (e.g. those who
> >       don't mind floods, don't think the dam will work, think it
> >       costs too much relative to the benefit for them).
> 
> How many people to you know who LIKE FLOODS?  A statement like this 
> shows just how detached from reality libertarians are.  Nobody likes floods,
> yet some people won't pay.  How do you explain this and deal with it?

As I thought was obvious from the title, the dam bit is *an illustrative
example* of general free-rider situations. The existence of people who
do not benefit from a project which is thought to be generally for the
"public good" is not at all unrealistic. Besides, if you use your imagination,
you can come up with any number of people who don't benefit from flood 
control:

    1) Seasonal residents who don't live there during the flood season
       and whose houses are in safe spots.

    2) People running a wilderness park where floods are actually an
       advantage in maintaining the original ecology.

    3) Farmers who think they gain more in soil fertility from floods
       than they loose in later planting time.

> Larry Kolodney     (INTERNET) lkk@mit-mc.arpa

      Radford Neal

radford@calgary.UUCP (Radford Neal) (01/06/86)

> In article <20@calgary.UUCP> radford@calgary.UUCP (Radford Neal) writes:
> >    A promoter for the scheme defines the project and determines how 
> >    much it will cost. He establishes a trust fund to be used to
> >    fund the scheme. Anyone may donate money to the trust fund. No
> >    money is disbursed until the fund contains enough money to 
> >    complete the project. If enough money is not collected by some
> >    specified time, all money is given back to the contributors.
>
> >Would people hold back in the hopes that the dam will be built using
> >other people's contributions, giving them the benefits for no cost?
> >Maybe, but they delay their benefits if they do. The longer the dam
> >goes unbuilt, the less likely it seems that they can get away with this
> >and the more likely they are to contribute what they think is "fair".
> 
> If the resident is interested only or mainly in the benefits to himself,
> he probably won't contribute anything.  The effect of his contribution on
> the probability that the dam will be built is small.  Let's suppose there
> are 10,000 residents concerned, and let's generously assume that his
> contribution of $500 increases the probability, as he judges it, by 1/1000.
> Then the expected monetary benefits of contibuting are $1000 * 1/1000 - $500,
> or -$499.

At last! A sensible argument against my scheme. 

Your mathematics isn't quite right. Remember he gets the money back (with
interest) if the scheme doesn't go ahead. 

The question seems very complex from a game-theoretic point of view. First
of all, there is not a single "contribute / don't contribute" decision. 
He might initially decide not to contribute but change his mind in a 
few months after it turns out other people haven't either. Even if 
we constrain people to make a single irrevocable decision before they know
anything about other contributions, their decision will be affected not
only by how much the contribution increases the probability of the scheme
going ahead (call this dP) but by the probability of it going ahead without
the contribution (call this P). If the benefit is B and the contribution
amount (assumed fixed) is C, the expected return from contributing is
B*dP-(P+dP)*C. Hence, he is more likely to contribute to unlikely projects
in this model. But this is unstable - a likely project would immediately
become unlikely if everyone followed this logic. The analysis is certainly
beyond me.

Various devices might help alleviate the problem:

    1) Make contributions to the fund secret, so no one knows how close
       it is to its goal. After some fixed time period, refund excess
       contributions in proportion to amount contributed.

    2) Make it a part of the trust agreement that all contributions are
       refunded if, say, 90% of the supposed beneficiaries do not 
       make some minimum contribution by the expiry date.

The bottom line which ought to make the scheme work, in the sense that
the dam actually gets built, is that all contributors benefit compared to
the dam not being built. Eventually, people would get tired of not having
a dam and pay up. If they've gone through this before, "eventually" ought
not to be very long.

> --Paul V. Torek, now at umcp-cs!flink, soon at umich!torek

      Radford Neal

janw@inmet.UUCP (01/06/86)

[laura@l5]
>As far as I can tell, there are two  sorts  of  free-riders  that
>some people think should be coerced.

>Type A:
>	This guy really and sincerely believes that the Good Thing is not worth
>	his money.  [ ... ]

>Type B:
>	This guy really and sincerely believes that the Good Thing is worth his
>	money.  But it will get done without him, so why should he bother [...]

Valid distinction, but there is a 3d type, probably the most important.

Type C:
	This gal really and sincerely believes that the Good Thing is worth her
	money.  And she is willing to do her share, *provided others do
	theirs*. But, there being no guarantee, she does not.

This is the classical Prisoner's Dilemma - but with two
crucial distinctions:
(1) There is an exchange of benefits, not of harm.
A prisoner cannot incrementally *unsqueal*, once he has squealed.
(2)  *Communication is possible*.

Radford Neal's scheme makes use of these differences.   It  is  a
general  solution for type C.  On popular issues like defense or
charity, I believe this category to be the most numerous.  It  is
also  *articulate*  (as is A) whereas B is typically shy to voice
its position.

The moral side of the issue (I am appealing  to  common  feeling,
not to specifically libertarian sensibilities):

Type C deserves something better than to be coerced. The right to
coerce  the  conscientious  objector  type  A  is doubtful . That
leaves type B - the willing free riders. OK, they are that  -  on
this one issue. They may be contributing more than their share on
something else. Radford's scheme simply ignores them, in the hope
that some of them may come on board, if they see that it is *not*
being done without them; and it lets the rest have a  free  ride.
My  guess  is  that it would work. After all, even the income tax
system worked for a long time, with very little enforcement. (Now
it  is breaking down, with a lot of enforcement). Charities work,
too, and collect more and more.  And  neither  of  them  has  the
advantages of this scheme.

		Jan Wasilewsky

berman@psuvax1.UUCP (Piotr Berman) (01/07/86)

>
> [ Radford Neal radford@calgary]
> >/* ---------- "Solution to Free Rider problem" ---------- */
>
> Looks like a *general* solution ! Details could vary, of course -
> e.g., subscribers could send pledges instead of actual money,
> but it should work for DEFENSE and everything else as well
> (welfare, education, road repair, space exploration ...).
> As soon as someone licks the crummy eminent domain problem
> - which could never arise in 3 DIMENSIONS anyway - we
> are ready for the *last* constitutional convention ! ( :-)?) .

I would not hurry for the convention.
What you propose is to burden all citizens with evaluating private
offers for everything.  Indeed, one simple project may task the
intelectual capacity of citizens pretty heavily.  A solution which
is good for each of 100 problems does not need to be good for
all of them.

Piotr Berman

janw@inmet.UUCP (01/08/86)

>[Frank Adams ihpn4!philabs!pwa-b!mmintl!franka]
>In article <2679@umcp-cs.UUCP> flink@maryland.UUCP (Paul V Torek) writes:
>>A solution to the free-rider problem would be very important in its own
>>right.
>
>So would trisecting the angle.  The free-rider problem is a mathematical
>fact, which can and sometimes does apply to real world situations.
>Restricting the range of possible actions (as by categorically ruling out
>the use of force) makes it more likely to be applicable; and often when
>it is applicable there are actions which can be taken which reduce the
>harm resulting from it; but there is no solution in general.

"Problem is a fact" is ambiguous. It can mean :(1) the FR problem
is a mathematical *problem* that may or may not have a solution -
in which case the comparison to angle trisection begs  the  ques-
tion; or (2) it is a mathematical problem proven to have no solu-
tion under certain assumptions which may or may not be applicable
to  real  life.  In which case a general solution for *real life*
situations (under some other set of assumptions) is  thinkable.
Only a *real-life* counterexample would preclude such a solution.

>Restricting the range of possible actions (as by categorically ruling out
>the use of force) makes it more likely to be applicable...

This sounds plausible - at the first glance.  But  *does*  ruling
out  the use of force merely *restrict* range of action *by a so-
ciety* ? No, it restricts it in some  directions  and  also  *ex-
pands*  it in others. Because members of the society may now plan
their actions under  the  assurance  that  force  won't  be  used
against them. This is a very practical matter - e.g., instability
of tax laws does chill  business  activity,  and  possibility  of
confiscation (where it is present) freezes investment.

Generally, *force* generates *fear* ; and a fearful society has
a *narrowed* range of action.

                Jan Wasilewsky

radford@calgary.UUCP (Radford Neal) (01/09/86)

> ...The free-rider problem is a mathematical
> fact, which can and sometimes does apply to real world situations.
> Restricting the range of possible actions (as by categorically ruling out
> the use of force) makes it more likely to be applicable; and often when
> it is applicable there are actions which can be taken which reduce the
> harm resulting from it; but there is no solution in general.
> 
> Frank Adams                           ihpn4!philabs!pwa-b!mmintl!franka

True in a sense. Confronted with a free-rider situation, someone will
at a minimum have to take the time to perform one of the "actions which
can be taken to reduce the harm resulting from it". This is a cost in
time which wouldn't be required if everyone altruistically paid their
"fair" share.

My proposed solution is an attempt to show a generally applicable 
mechanism for transforming a free-rider situation into a non-free-rider
situation, or at least into a more tractable free-rider situation. The
mechanism proposed (trust fund, etc.) entails certain administrative costs,
of course, but so do the coercive alternatives.

     Radford Neal

radford@calgary.UUCP (Radford Neal) (01/13/86)

> One major weakness of the scheme outlined by Radford is that it does not
> distinguish between abstention and active opposition to the construction of
> the dam. If I am against building the dam (on environmental or economic
> grounds, let's say) then I am free to take out full-page ads in the local
> papers urging people not to contribute but this does not change the fact
> that only 'yes' votes are counted.
> 
> Gabor Fencsik                  {ihnp4,dual,lll-crg,hplabs}!qantel!gabor

The scheme is an attempt to solve the Free Rider problem of how to 
finance projects which will benefit everyone if they benefit anyone. If some
people are actually harmed, we have another problem to handle also - one
traditionally "solved" by use of eminent domain and political definitions
of acceptable costs. I was not attempting to solve this problem. 

For now, you can imagine any proposal to build a dam in this way being
subject to the usual constraints of any private project, e.g. they will have
to buy the land that gets flooded first, if they cause water pollution they
may be sued, etc.

     Radford Neal

radford@calgary.UUCP (Radford Neal) (01/13/86)

> The real question to me though is whether anyone is in fact being
> coerced by a governmental solution to free rider problems. If we
> have a situtation which involves only Jan W's category C indviduals,
> each of which will contribute but only if everyone else does, then
> the government is only coercing them to do what they prefer. Can
> anyone be said to be forced into doing something they want to do?

The problems with the governmental solution of the Free Rider problem
are the following:

    1) Most real projects will not benefit *everyone*. At best a 
       large majority will benefit. E.g: a government-financed program
       to find a cure for tooth decay will not benefit me, because
       I am naturally immune to dental caries. Some people consider it
       unethical to require non-beneficiaries to pay for what they 
       don't need.

    2) Using political means to decide which projects are beneficial
       is likely to be very inaccurate. Many projects which are not
       worth their cost will be built; many worthwhile projects will
       not be financed. Do you favour research into a cure for cancer?
       Of course! Who couldn't? How about a new sewage treatment plant?
       I don't know, doesn't sound exciting... Cost vs. benefit is 
       seldom mentioned. A system which ties decisions to the individual's
       judgement of the affect on them and of the cost to them might
       do better.


    Radford Neal