1. The Group Formation Problem

2. Group formation (interactions)
Truman (revisited)
There are potential groups in society
Disturbance
Group formation (interactions)
Interest group formation
(claims on other groups)

3. Collective Action Problems
Problems that arise when a group of people tries to reach and implement agreements.

4. Group Formation as a Collective Good
Benefits everyone
Benefit(s) cannot be divided
No one in the group can be excluded from receiving benefits

5. Problems in producing collective goods
Transaction costs: costs of organizing and working together
Conformity costs: costs of compromise
These costs must be paid in order for a collective good to be produced

6. The Free Rider Problem
One person’s contribution to the collective good is small
Collective good will be provided regardless of person’s contribution
The person can receive the benefits without contributing
Private incentive is to “free ride” on contributions of others
Examples?
CONTRIBUTION is valuable to the individual. Would privately prefer NOT to pay the costs, and have the good provided anyway.

7. Olson What is Olson’s argument? How is this a critique of Truman?
Extending his argument, will groups form?
What might make a group more likely to form?
Olson’s argument is that groups won’t in fact form because people are subject to the free rider problem.
Do a little game theory.
Rank the following:
3. Get the benefit, pay nothing.
2. Get the benefit, pay something.
Don’t get the benefit.
Two people—choice is form a lobbying group, or don’t form one.
How is this a critique of Truman?
Analogy: individuals act in their self interest. Groups must act in their group interest. But htat isn’t a valid analogy.
Unless the number of individuals in a group is quite small, or unless there is coercion or some other special device to make individuals act in their common interest, rational self-interested individuals will not act to achieve their common or group interests.
Organizations: further the interests of their members. No point in starting an organization to play solitaire. Individual interests can best be pursued without an organization.
BUT just because an organization serves the interest of members does not mean that people in the group do not still have individual intersts.
PUBLIC GOODS AND LARGE GROUPS
He uses the example of firms in a purely competitive industry. Even though they all may want to organize and lobby for price supports, there are costs to be paid for that organization that no individual firm wants to pay.
Same is true in politics. People love their country, but many will not voluntarily pay taxes.
So how DO groups form? How is collective action achieved or goods produced?
Change the equation.
What if the group is so small that without one group’s participation, the good will not be provided?
What if the benefit to the group is so high, that it will outweigh the cost of providing it, even if it acts alone?
What if the benefits a group seeks are PRIVATE benefits rather than COLLECTIVE benefits?
--contracts, entitlements, tax loopholes are private goods that can be lobbied for by a group—excludable

8. What kinds of groups will be most likely to form
What kinds of groups will be most likely to form? What kinds of groups will be least likely to form?

9. Implications What does it imply about pluralism?
How is it a different argument than Schattsneider’s and Lowi’s? Is it more or less persuasive? Relevant?