Moral hazard and free riding in collective action (Q2272182)

This paper considers a 2-stage game. In the first stage, players decide whether to join a lobby; in the second stage, lobbies that have formed conduct collective action. Two cases are considered, whether effort level in the second stage is verifiable (no moral hazard) or not (moral hazard). The main result is the existence of an equilibrium both with and without moral hazard.