Free Riders

A free rider can be defined as a person who, being a member of a group, decides to take advantage of the consumption of a good, or use of a service, that is generated as a result of the common efforts by the group members, without bearing a proportionate (or, in pure free riding, any) share of its cost of production or without contributing to its direct realization. One [Page 947]simple way of representing free riding is to think of a member of a rowing team who fails to do his or her share by faking the rowing effort—consequently getting a “free ride” on the boat.

The possibility of free riding is not an exceptional case: On the contrary, according to economic and rational choice theory (as we will discuss in the next paragraphs), it is a rather natural condition of human interaction within groups. This is because rational, self-interested individuals will naturally tend to minimize their costs of participation in a group if they can still benefit from the outcomes of cooperation.

In the business world there are many examples of situations where individuals have a positive incentive to free ride. For instance, consider being a member of a sales team. You know that your company will reward each member of the team with an annual bonus if a predetermined goal—say, an increase of 5% in total sales—is reached by the end of the year. You also know by the beginning of December that your team is very likely to meet the target due to the good work done by everyone so far, you included. At this point, you will have an incentive not to contribute to the collective effort anymore and still will enjoy the benefits of the collective good. Similar manifestations of the free rider problem can be found within many other team working situations, such as in R&D (e.g., an individual can free ride the intellectual property generated by others), in production (e.g., lack of or less effort from some team members, as in the example of the rower), or in services, in a tax or legal consulting team (e.g., weak or no contribution in performing a team brainstorming task).

The free riding tendency can be extended from the provision of collective goods and services to, more generally, a wide range of situations concerning participation in collective action—for example, teamwork within organizations, local community activities, pressure groups, social activism, etc. A wellknown example of its manifestation concerns the tendency to not participate in political elections—when an individual enjoys the benefits resulting from collective action (elections produce a government, which ensures the provision of public goods such as roads and infrastructure, a legal system, and national protection) without bearing the cost of participating in the activity itself. Another manifestation of the free rider problem that creates social concerns refers to the preservation of natural resources and to issues such as pollution and environmental degradation: Everybody in society benefits from actions that preserve air and water quality, but since the relative impact of any individual's behavior on overall pollution is hardly noticeable, no one has an adequate incentive to contribute with her or his effort to preserve natural resources.

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