Rational Choice Theory (RCT)
and Its Critics
PS7740: Political Economy
Susumu Suzuki
Department of Political
Science
Wayne State University
Part I:
Logic of Collective Action
and RCT
Mancur Olson (1932-1998)
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Former professor of Economics and the founder of IRIS
(Institutional Research and the Informal Sector) at the University
of Maryland.
A Father of Political Economy and Pubic Choice
– Public Financing and Public Policy
– Political Economy
– International Relations e.g., Economic Theory of Alliances
Three Major Publications:
– The Logic of Collective Action (1965)
– The Rise and Decline of nations (1982)
– Power and Prosperity (2000)
(Source: ttp://www.iris.umd.edu/StaticReader.aspx/About_IRIS/History/Mancur_Olson.htm)
Olson’s Collective Action Approach (1)
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Olson’s Two Key Questions to Traditional Theory of
Rational Group Behavior: Purpose of the
organization= Increase in Common Interests
– What makes collective action possible?
– what is the relationship between group size and
the group?
Olson’s Answer: rational and self-interested
individuals will not act voluntarily to achieve their
common or group interests.
Olson’s Collective Action Approach (2)

Why? --Logic of Collective Action“The larger
the group, the less it will further its common
interests” (p. 36)Free Rider Problem
”The amounts of the collective good that a member of the
group receives free from other members will further reduce
his incentive to provide more of that good at his own
expense” (p. 35)

Olson’s argument of Free Rider Problem
become a central concern in public policy,
political science or economic theory of
politicspolitical economy
What is Collective Good?
“A common, collective, or public good is here defined as
any good such that, if any person X I in a group X1,
…..Xn consumes it, it cannot feasibly be withheld from
the others in that group” (p. 14)
 Two Elements of collective or public good
– Excludability in ownership
– Rivalrous Consumption
Collective vs. None Collective Good
Excludability
Yes
Private Goods
Common Pool
Resources
Club Goods
Public Goods
Yes
Rivalrous
consumption
No
No
Olson’s Two Main Theses


Olson’s Main Thesis #1: “The larger the
group, the farther it will fall short of providing
an optimal amount of a collective good”
(p.35) due to the free rider problem.
Olson’s Main Thesis #2: “In small groups with
common interests there is accordingly a
surprising tendency for the “exploitation” of
the great by the small” (p.35)
Group Size and Behaviors (1)

Large Groups: each member gets proportionally smaller benefit
from a collective good.
–
–
–

the individual does less contribute because of a smaller return.
One member of a large group is less likely to behave for all unless
the individual return is more than its cost of action.
Needs for coercion or some enforcers to provide a collective good.
Small Groups: each member gets proportionally more benefit
from a collective goods than one of the larger groups.
–
–
The collective good provides by the voluntary, rational, and unilateral
action of one or two members who find that their reward for providing
the good is easily more than the costs they pay.
Since others pay the costs, some members of small groups see no
incentive to provide the good end of the exploitation by the small.
Group Size and Behaviors (2)
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
Two Non-market groups
– Privileged group: A few of the members with incentive to
provide the collective goods for all. No formal organization
is necessary (p.50)
– Intermediate group: with group coordination or institutions,
some members of the group provide a collective goods.
Latent group: no members of the group have incentive to
contribute or act collectively to obtain a collective good.
–
–
–
Separate and selective incentive for selective individuals from the
group.
Positive and negative inventive:
Latent group = large group: a latent power or
capacity for action, but potential power can be
mobilized “only with the aid of selective
incentives.”
Economic and Social Incentives

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Small Groups= privileged and intermediate
groups economic and social incentives
lead their members to obtain a collective
goods
Large and latent groups no incentive and
no social pressure lead their members to
obtain a collective good
Demands for institutions
Part II:
Critics to RCT
Donald P. Green
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A. Whitney Griswold Professor of Political Science since 2001
and Director of Institution for Social and Policy Studies since
1996 at Yale University
Research Interests: Experimental Research, Party, Voting
Behavior etc.
Three Books:
–
–
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Pathologies of Rational Choice Theory: A Critique of Applications in
Political Science. (with Ian Shapiro,1994)
Partisan Hearts and Minds: Political Parties and the Social Identities of
Voters (with Bradley Palmquist and Eric Schickler, 2002)
Get Out The Vote! How to Increase Voter Turnout (with Alan S. Gerber,
2004)
(Source: http://research.yale.edu/vote/resume.htm)
Ian Shapiro
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Sterling Professor of Political Science and Henry R. Luce
Director of the MacMillan Center for International and Area
Studies at Yale University.
Research Interests: Political Behavior, party
Thee Major Books
–
–
–
Pathologies of Rational Choice Theory: A Critique of Applications in
Political Science (with Donald Green, 1994)
Death By A Thousand Cuts:The Fight Over Taxing Inherited Wealth (with
Michael Graet, 2004)
Containment: Rebuilding a Strategy against Global Terror (2006)
(Source: http://www.yale.edu/macmillan/shapiro/flash.htm)
The Nature of RCT
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Core assumptions:
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Utility maximization
Structure of preferences (Transitivity) If A likes
B, B likes C, thus A likes C.
Expected utility rather than actual utility
Centrality of individuals in the explanation of
collective outcomes
Homogeneity across the units or individuals
Assumptions in Explanation
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Intentions as Causes
Universalism and the Search for Equilibria
Methodological Pathologies

Two Shortcomings of rational choice theories
Problem 1. methodological defects
Problem 2. Universalist aspiration
Problem 2 >> Problem 1

Why? a “method-driven” research rather
than a “problem-driven” research.
Shortcomings in RCTs
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Post Hoc Theory Development
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Formulating Tests
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Difficulty with Empirical Test (p. 36)
Slippery Predictions (p. 39)
Vaguely Operationalized Predictions (p.41)
Selecting and Interpreting Evidence
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Searching for confirming evidence (p.42)
Projecting evidence from Theory (p. 43)
Arbitrary Domain Restriction (p. 45)