In our daily routine, we face many situations where we need to coordinate in cooperating, such as maintaining friendships or team working. If we all put all our efforts in doing so, we will efficiently get the best possible outcome for everybody. However, we are occasionally tempted to look the other way and let the rest solve the problem. These situations are called social dilemmas and this passive attitude of not exerting any effort in the common goal and benefitting of others doing so is denominated the free rider problem. The purpose of this chapter is to present this issue by means of a public goods game and propose the different mechanisms experimental literature has demonstrated to conceal the free rider problem. Examples of this nature are maintaining relationships over prolonged periods of time, determining a minimum threshold for the common project rewards to be enjoyed by everybody or enabling transparent communication. Additionally, sanctioning opportunities promote cooperation even further. Besides economic penalizations, punishment can occur at a social domain through hostility, ostracism or bond breaking. Moreover, it can be implemented either from an individual approach or through the use of centralized institutions endowed with sanctioning power.
Part of the book: Game Theory