selective incentive

The collective action problem arises when individuals in a group may not work together to achieve a common goal, even if they share interests. This is because individual contributions can be costly, and people might try to "free ride" on the efforts of others. To overcome this, selective incentives are used. These are extra rewards for participating or penalties for not participating.

For example, a trade union might offer benefits like legal advice or pension schemes to encourage membership, in addition to their primary goal of collective bargaining. Game theory, particularly the "prisoner's dilemma," illustrates how individual rational choices can lead to suboptimal group outcomes. Incentive compatibility is a related concept in game theory and economics where participants' motivations align with the group's established rules and goals.12