The Logic of Reciprocity: Trust, Collective Action, and Law

Abstract:     
This paper addresses the relevance of reciprocity theory to law and public policy. Regulatory law across a wide variety of domains reflects the influence of the rational choice theory of collective action, which holds that individuals can be expected to contribute to societal collective goods only if prodded by material incentives in the form of either subsidies or penalties. The reciprocity theory, in contrast, suggests that individuals will often contribute voluntarily to collective goods so long as they believe that most others are willing to do the same. Promoting trust - in the form of reason to believe that fellow citizens are contributing their fair share - is thus a potential alternative to costly incentive schemes for solving societal collective action problems. Indeed, conspicuous penalties and subsidies, the reciprocity theory implies, might sometimes aggravate rather than ameliorate collective action problems by giving citizens reason to doubt that other citizens are contributing voluntarily to societal collective goods. These conclusions are illustrated with discussions of several regulatory problems, including tax evasion, the siting of toxic waste facilities, and community policing.

Working Paper Series