In this video, I define two general theories (collective action theory and principal agent problems) that help explain how politics works (and sometimes doesn’t work). After briefly explaining the theories, I talk about how these theories can both describe the problem of corruption.
A collective action problem is a problem where you have a bunch of people acting independently who would benefit from working together toward a common goal. The problem is that everyone’s individual incentives encourage them to act in the wrong way.
The classic example of this is a shared kitchen. You and your roommates would all be better off with a clean kitchen, but no one wants to do the dishes and so you leave yours in the sink, hoping someone else will wash them. Because everyone thinks the same way, the dishes pile up and the kitchen gets dirty.
That’s a simple example, but the logic is the same for bigger societal problems like air pollution or traffic. Everyone would benefit if they took public transportation – they would get places faster and have cleaner air – but no one wants to take the bus.
This is called the free rider problem – when you can benefit from a public good (like a clean kitchen or clean air) but if you don’t have to contribute to the outcome, you have an incentive to let other people pay while you still reap the benefits.
A related problem is called the tragedy of the commons, where a community shares a common, depletable resource and keep using it until it’s gone. Overfishing is the most commonly used example here.
Principal agent problems are also pretty straightforward. The idea is that one individual or group (the principal) forms an agreement with another party (the agent) to do something for them. The principal agent problem is that the agent doesn’t always do what the principal wants.
The simplest example of a principal agent problem is an employment contract – an agent signs a contract to perform a job for a principal. But if you don’t pay the employee enough or never check in with them, the employee may not do the job to your standards – that’s the problem.
Both of these theories rely on one assumption, and that is that people are what is called rational actors who behave strategically. In political science, this doesn’t mean that people are smart. Rationality means that people know what they want and can prioritize those interests (or, more formally, have ranked preferences). Strategic behavior also means something specific: that people observe what everyone else does and make a cost-benefit analysis on what to do based both on what they want and what they think other people will do.
Both collective action and principal agent problems arise when the rational thing to do conflicts with the “right” thing to do. Corruption, for example, can be described as a principal agent problem. If bureaucrats are poorly paid (or given too much freedom of action), for example, it makes rational sense for them to take a bribe to give a company preferential treatment on a government contract, even if it goes against the interests of their boss (a leader or the general public, depending on your perspective).
Corruption can also be described as a collective action problem. When bribery is commonplace in a society (when everyone gives bribes to get drivers licenses or university degrees, for example), asking for and paying bribes becomes the rational thing to do, even though everyone is harmed by the rise in traffic deaths and decline in quality of education (and even though most people think it is morally wrong). Why shouldn’t any one person take a bribe if they see everyone else doing it? Being the one honest official is a sucker’s game – you will be missing out on income everyone expects you to have, and your colleagues may look at you with suspicion for not playing along.
This video has outlined two basic models for thinking about politics – principal agent problems and collective action problems – and applied them to the issue of corruption. Next week we will talk about the causes of corruption, its effects, and how we can use these models to help resolve the problem of corruption.