Institutional Structure and the Logic of Ongoing Collective Action

Work by Axelrod, Hardin, and Taylor indicates that problems of repeated collective action may lessen if people use decentralized strategies of reciprocity to induce mutual cooperation. Hobbes's centralized solution may thus be overrated. We investigate these issues by representing ongoing collective action as an n-person repeated prisoner's dilemma. The results show that decentralized conditional cooperation can ease iterated collective action dilemmas—if all players perfectly monitor the relation between individual choices and group payoffs. Once monitoring uncertainty is introduced, such strategies degrade rapidly in value, and centrally administered selective incentives become relatively more valuable. Most importantly, we build on a suggestion of Herbert Simon by showing that a hierarchical structure, with reciprocity used in subunits and selective incentives centrally administered, combines the advantages of the decentralized and centralized solutions. This hierarchical form is more stable than the decentralized structure and often secures more cooperation than the centralized structure. Generally, the model shows that the logic of repeated decision making has significant implications for the institutional forms of collective action.