Costs of Collective Action in Nashville

On a recent trip to Nashville with friends, I was able to experience firsthand Buchanan and Tullock’s theory that collective action, just like private action, imposes externalities for the individual. When planning our itinerary, the Type A personality in the group (let’s call her Sharon) took control of the planning. Because I did not protest to Sharon’s self proclamation of itinerary czar, I incurred high external costs in that I had to endure costs as a result of the actions of others in the form of partaking in activities around Nashville I would not have otherwise chosen to pay for. For example, this dictator like decision-making structure resulted in an itinerary that allowed for much more time for shopping than I would have personally chosen. Now, according to Buchanan and Tullock, if I were a rational individual, I would try to choose a decision-making rule that would minimize the costs I expected to incur, at the time of constitutional formation aka the itinerary formation stage.

However, by passively allowing the Type A person to take over, my decision costs where extremely low or near zero. Here we define decision-making costs as: the costs one can expect to incur while participating in the whole set of collective actions defined by a single activity. This is a silver lining to my high external costs. Next time, I will advocate for a unanimous decision-making structure, to better protect my interests and to eliminate unwanted external costs. If that is not possible, I will act more rationally to maximize my own utility by either entering voluntary contracts that reduce externalities or by pushing for itinerary formation requirements that permit private decisions to be replaced by collective decisions instead.