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Disembedded, embedded, and embodied rationalities describe individual forms of rationality. Let’s explore how groups act to understand the world and make decisions. Collective rationality takes two forms: collective action and collective reasoning.
Collective Action
Collective action occurs when individuals make self-interested choices that add to other people’s decisions to result in group action.
For example, let’s say we had three companies that produced soap in a city, and they were trying to reduce the carbon footprint of their industry.
- Company A decided to invest in eco-friendly technology. As a consequence, it reduced its annual output of carbon dioxide by one tonne.
- Company B decided to make the same investment, reducing its carbon dioxide output by one tonne also.
- Company C, however, was uninterested in reducing its carbon footprint and refrained from making the same investment.
Collectively, all three companies reduced carbon dioxide emissions by two tonnes. Rather than coordinate activity, each company made their choice independently. The collective action was the total of all those individual choices.
Collective action is based on two assumptions.
- First, individuals make choices in their self-interest.
- Second, if a person belongs to a group, and their fortunes rise and fall with that of the group, then they will make individual choices that are in the group’s best interest.
Though there are many situations where those assumptions hold, there are many circumstances where they fall apart. Examples of these circumstances include the Prisoner’s Dilemma, Tragedy of the Commons, and Arrow’s Impossibility Theorem. The following example explores the Tragedy of the Commons.
The Tragedy of the Commons: A Failure of Collective Action
A ‘commons’ is a shared resource. For example, fisheries share a fishing stock, cattle ranchers share pastureland, or farmers share a river’s water.
We see this in international efforts to combat climate change by reducing reliance on fossil fuels. (Not everyone who reads this textbook may believe that human activity drives climate change, but those nations seeking to reduce their dependence on fossil fuels do. This example takes the perspective of one of those nations.)
In this example, the commons is our climate. Every country shares the climate in common.
Reducing reliance on fossil fuels is difficult and requires nations to make significant investments into their energy infrastructure. The benefit of this investment, however, is a hoped-for reduction in the severity of climate change caused by the burning of fossil fuels.
Let’s say Nation A chose not to make these investments needed to reduce fossil fuels. As long as every other nation still made those investments, Nation A would receive the benefits (because global reliance on fossil fuels declined) without any of the costs. It is, therefore, in Nation A’s best interests to continue using fossil fuels and let other nations invest in ch