Theory of Collective Action: Structuring a Collective under Deficit of Trust

Abstract

The article examines the possibilities of coordinating action among members in a collective with the aim of maximizing individual gains. Projected aggregate income is assumed to increase as the effort invested by each individual member of the collective increases, subject to the law of decreasing returns. Mathematical analysis is performed using two income functions: one non-specific, used for finding the overall solution, and the other – a specifically formulated, manifest mathematical relationship serving to calculate the results of collective action. It is shown that in order to avoid a balanced (equilibrium) yet inefficient outcome, coordination of respective effort is necessary. Coordination based on mutual trust among all members is capable of attaining optimal outcomes for the collective. Deficit of trust, characteristic of numerous collectives, alongside their members’ desire to maximize individual gains, creates demand for the formation of smaller groups of individuals united by mutual trust. Within each group of this kind, members coordinate their actions, aiming to maximize gains as a group. As a result, members of the group increase their effort above equilibrium levels, thus increasing individual gains for all members of the larger collective. The same effect is produced by an increase in the number of members in any group, as well as formation of new groups out of previously unaffiliated members of the larger collective. In view of decreasing returns and lack of information where value is created collectively, transformation of a uniform collective into a more intricately structured system partially compensates for the lack of social capital, opening the road to increasing the efficiency of collective action.