Much like in The Office, my roommates and I decided to make a chore chart, because after a mere three weeks, we are already living in filth. As dishes fill to the faucet, trash overflows, and cabinets are empty, there are plenty of chores to go around for the 9-person house. This should have allowed us to live in harmony, but after only one week, it was evident that this would not be the case.
Here inlies the Holdout Problem. The property rights in question (our house) are held by 9 peoples, so each party has power over the other. But there are 9 chores, so what happens when 8 people do their chores and the 9th person refuses? The 9th person will be beneficiary to a clean house along with the other 8; however, the 8 who did their job will not be nearly as satisfied, as there is one glaring gap in the cleaning. This 9th person suddenly wields great power. This is similar to the fishermen example in the Gruber writings. If 100 fishermen are causing an externality, and they each are given $1 to stop it, that 100th person will demand more, because they can. It's also similar to what happens when a company is bought out. If a company has 1000 shares and sells 999 to the same buyer, that 1000th share's holder has great value, because they do not just offer one share: they offer total control of the company.
So what are the 8 of us to do? #9 continues to hold out while we have done our jobs, and he knows we're getting antsy. Will he demand an allowance? Will he demand to have no chores the next week? Will he threaten to move out, and not pay rent? Because of #9's holdout, we fail to reach a Coasian Solution, and fail to have a clean house.
1 comment:
Hey Aiden, good post! I really relate to this, but I've noticed something about my behavior and that of my roommates that might add to this conversation. Since it's always just easier to leave the dishes in the sink after you've finished, they often pile up and create as you say utter "filth". They produce an externality. I'm a very clean roommate, I just can't stand this. And sometimes, when I've just had enough of it, or I have some friends coming over, my private marginal cost curve goes above the SMC curve. I gain so much utility by ridding the kitchen of all of the dirty dishes that I'm willing for my roommates to get a free ride off of all the clean dishes. We talked briefly about this in class when one large factory owner might get much more utility out of being able to produce and so he unilaterally cleans up the river, even if the smaller factories on the river don't pitch in and still get to produce as a result. I'm the big factory owner in this case. I could easily see something similar to this happening in your apartment too.
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