Free Riders, Holdouts, and Public Use: A Tale of Two Externalities

Free riders and holdouts are market failures that potentially impede the completion of otherwise beneficial transactions. The key difference is that the free rider problem is a demand side externality that requires taxation to compel payment for a public good, while the holdout problem is a supply side externality that requires eminent domain to force the sale of land for large scale projects. This paper highlights that distinction between these two problems and uses the resulting insights to clarify the meaning of the public use requirement of the Fifth Amendment takings clause.

Backward-bending of labor supply function and free riders

It seems like that backward- bending of labor supply function can be observed in Central Asian Countries such as Uzbekistan and Kazakhstan. People’s basic needs of life are satisfied and they do not increase labor supplies even if wage increases. It is possible to find some cases in which slowdowns increase, when a manager in a firm enforces penalties for workers have slowdowns. This phenomenon occurs because a worker prefers the position of equilibrium on the labor supply function always in the upper direction. This article explains the increase of free-riders by penalties and how to avoid them.

Detecting Free Riders in Collective Brands through a Hierarchical Choice Process

Free-riding behaviors exist in tourism and they should be analyzed from a comprehensive perspective; while the literature has mainly focused on free riders operating in a destination, the destinations themselves might also free ride when they are under the umbrella of a collective brand. The objective of this article is to detect potential free-riding destinations by estimating the contribution of the different individual destinations to their collective brands, from the point of view of consumer perception. We argue that these individual contributions can be better understood by reflecting the various stages that tourists follow to reach their final decision. A hierarchical choice process is proposed in which the following choices are nested (not independent): “whether to buy,” “what collective brand to buy,” and “what individual brand to buy.” A Mixed Logit model confirms this sequence, which permits estimation of individual contributions and detection of free riders.

Free-riding, cooperation, and 'peaceful revolutions' in copyright

Modern copyright law is based on the inescapable assumption that users, given the choice, will free-ride rather than pay for access. In fact, many consumers of cultural works – music, books, films, games, and other works – fundamentally want to support their production. It turns out that humans are motivated to support cultural production not only by extrinsic incentives, but also by social norms of fairness and reciprocity. This article explains how producers across the creative industries have used this insight to develop increasingly sophisticated business models that rely on voluntary payments (including pay-what-you-want schemes) to fund their costs of production. The recognition that users are not always free-riders suggests that current policy approaches to copyright are fundamentally flawed. Because social norms are so important in consumer motivations, the perceived unfairness of the current copyright system undermines the willingness of people to pay for access to cultural goods. While recent copyright reform debate has focused on creating stronger deterrence through enforcement, increasing the perceived fairness and legitimacy of copyright law is likely to be much more effective. The fact that users will sometimes willingly support cultural production also challenges the economic raison d'être of copyright law. This article demonstrates how 'peaceful revolutions' are flipping conventional copyright models and encouraging free-riding through combining incentives and prosocial norms. Because they provide a means to support production without limiting the dissemination of knowledge and culture, there is good reason to believe that these commons-based systems of cultural production can be more efficient, more fair, and more conducive to human flourishing than conventional copyright systems. This article explains what we know about free-riding so far and what work remains to be done to understand the viability and importance of cooperative systems in funding cultural production.

Give-and-take based peer-to-peer content distribution networks

Content Distribution Networks (CDNs) are widely used to distribute data to large number of users. Traditionally, content is being replicated among a number of surrogate servers, leading to high operational costs. In this context, Peer-to-Peer (P2P) CDNs have emerged as a viable alternative. An issue of concern in P2P networks is that of free riders, i.e., selfish peers who download files and leave without uploading anything in return. Free riding must be discouraged. In this paper, we propose a criterion, the Give-and-Take (G&T) criterion, that disallows free riders. Incorporating the G&T criterion in our model, we study a problem that arises naturally when a new peer enters the system: viz., the problem of downloading a `universe' of segments, scattered among other peers, at low cost. We analyse this hard problem, and characterize the optimal download cost under the G&T criterion. We propose an optimal algorithm, and provide a sub-optimal algorithm that is nearly optimal, but runs much more quickly; this provides an attractive balance between running time and performance. Finally, we compare the performance of our algorithms with that of a few existing P2P downloading strategies in use. We also study the computation time for prescribing the strategy for initial segment and peer selection for the newly arrived peer for various existing and proposed algorithms, and quantify cost-computation time trade-offs.

Altruistic learning.

The origin of altruism remains one of the most enduring puzzles of human behaviour. Indeed, true altruism is often thought either not to exist, or to arise merely as a miscalculation of otherwise selfish behaviour. In this paper, we argue that altruism emerges directly from the way in which distinct human decision-making systems learn about rewards. Using insights provided by neurobiological accounts of human decision-making, we suggest that reinforcement learning in game-theoretic social interactions (habitisation over either individuals or games) and observational learning (either imitative of inference based) lead to altruistic behaviour. This arises not only as a result of computational efficiency in the face of processing complexity, but as a direct consequence of optimal inference in the face of uncertainty. Critically, we argue that the fact that evolutionary pressure acts not over the object of learning ('what' is learned), but over the learning systems themselves ('how' things are learned), enables the evolution of altruism despite the direct threat posed by free-riders.

Cool Rationalities and Hot Air: A Rhetorical Approach to Understanding Debates on Renewable Energy.

A key obstacle to the wide-scale development of renewable energy is that public acceptability of wind energy cannot be taken for granted when wind energy moves from abstract support to local implementation. Drawing on a case study of opposition to the siting of a proposed off-shore wind farm in Northern Ireland, we offer a rhetorical analysis of a series of representative documents drawn from government, media, pro- and anti-wind energy sources, which identifies and interprets a number of discourses of objection and support. The analysis indicates that the key issue in terms of the transition to a renewable energy economy has little to do with the technology itself. Understanding the different nuances of pro- and anti-wind energy discourses highlights the importance of thinking about new ways of looking at these conflicts. These include adopting a “conflict resolution” approach and “upstreaming” public involvement in the decision-making process and also the counter-productive strategy of assuming that objection is based on ignorance (which can be solved by information) or NIMBY thinking (which can be solved by moral arguments about overcoming “free riders”).

Publicness and Taken-for-granted Knowledge: A Case Study of Communal Land Formation in Rural Thailand

The lack of public-mindedness can cause problems in the social order of people’s daily lives, such as the tragedy of the commons and the problem of free riders. Some scholars such as Habermas assert that communicative rationality is the solution, expecting that individuals will communicate with each other to reach a consensus without being bounded by aspects of social background. Other scholars advocate the revitalization of traditional community culture. These arguments, however, are not based on reality. By using the case of communal land formation in rural Thailand, the author shows that collective action is neither a revival of tradition nor a result of communication free from social constraints. Rather, cooperation emerges because the people rationally respond to their present needs and have built, through daily social interactions, taken-for-granted knowledge about how they should behave for cooperation.

Politics vs economics: unintended consequences of Governments’ interventions in airlines’ markets

Overlaying theories of market inefficiencies and/or failure onto airline economics indicates that the industry encounters at least seven of the indicators which have triggered interventions by national, multi-national or supranational governments (NMSGs) trying to resolve political, social or environmental problems. The NMSGs’ interventions aimed to resolve lack of competition, fill missing markets, and neuter the presence of negative externalities, free riders, social inequalities and moral panic. Desk research showed that their interventions (many lacking preliminary economic analysis) either intentionally solved and/or unintentionally triggered market inefficiencies or failures. It is possible that some of the interventions could eventually make advanced world airlines subsidise their advancing world competitors.