- #1
mXSCNT
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Suppose there is a person, Joe, who can get a piece of information through research that has a cost to Joe of $2 million. Suppose there are 100 people, and the information is worth $25 thousand to each of them. The question is, how can the 100 people organize to pay Joe what he needs, so they can get that information?
Consider a simple form of organizing where some of the 100 people form a group G and each person in the group pays Joe $22 thousand, in exchange for which Joe will tell the information to the members of G. If all 100 people joined the group, everyone would make a profit.
However, suppose one of the 100, call her Jane, does not join G. Then if we assume the group forms, Jane can buy the information second hand from one of the members of G. The price to Jane is then determined by competition among the members of G - and since the cost of passing on the information once it has been found is almost 0, the price for Jane will also approach 0. Therefore Jane has a strong incentive not to join G. This works for every one of the 100 people, so no one will join G.
So how can the 100 people organize to pay Joe what he needs, so they can get that information? Is there perhaps some alternate voluntary contract structure that would give people an incentive to join G and contribute their share?
Consider a simple form of organizing where some of the 100 people form a group G and each person in the group pays Joe $22 thousand, in exchange for which Joe will tell the information to the members of G. If all 100 people joined the group, everyone would make a profit.
However, suppose one of the 100, call her Jane, does not join G. Then if we assume the group forms, Jane can buy the information second hand from one of the members of G. The price to Jane is then determined by competition among the members of G - and since the cost of passing on the information once it has been found is almost 0, the price for Jane will also approach 0. Therefore Jane has a strong incentive not to join G. This works for every one of the 100 people, so no one will join G.
So how can the 100 people organize to pay Joe what he needs, so they can get that information? Is there perhaps some alternate voluntary contract structure that would give people an incentive to join G and contribute their share?