POLI 211 Lecture Notes - New Institutional Economics, Invisible Hand, Direct Democracy
16 Dec 2012
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Document Summary
Olsen was an economist who contributed to our understanding of the theory of collective action people want to act in groups but their individual desires trump their ability to work time and time again. Olsen"s starting point: no society can satisfactorily work if it does not have a peaceful order & other public goods and services. Anarchy does not work well. (i. e somalia) In small groups, order can emerge by voluntarily agreement as each member can more easily receive shared benefits. The larger the group is the more difficult it is to organize for collective action. Larger groups in collective action cannot work without enforcement mechanisms. Once roaming bandits settled down and became stationary bandits they began to provide for peaceful order. By contrast, roaming bandits have little incentive to produce longstanding goods or institutions. Once a bandit makes himself a ruler he provides for peace but continually extracts a price for that service.
