A collective action problem
exists where rational individual action can lead to a strictly
Pareto-inferior outcome, that is, an outcome which is strictly less
preferred by every individual than at least one other outcome.
Following are the ways in which
collective action problem can be solved.
- Increasing the Number of
Strategies: The distributional problem associated with
collective action problem can be solved by increasing the number of
strategies. This is because existence of more strategies results in
increase in the number of alternative outcomes from which players
can select.
- Perfect Information:
Existence of perfect information either due to the ability of the
parties involved to communicate or due to sequential interaction
can solve the co-ordination aspect of the collective action
problem.
- Repeated Interaction:
Repeated interaction causes dilemmas in the mind of players
regarding the preferences of the other players. This is likely to
make co-operation between the players a rational strategy rather
than defecting or betraying.