Explain the common interest logic and the economic logic of

Explain the \"common interest logic\" and the \"economic logic\" of group behavior in terms of the likelihood of the success of groups.

Solution

Common interest logic claims that e should concentrste on aggregate utility derived by the society by a decision. It is used when we talk of government policies or social welfare. Individal interest logic i used when a businessman or consumer is taking a decison and his personal benefits are ost important to him. If we consider it from Micro perspectiv, Individual interest lgic has a higher likelihood fo the success of two groups. if we consider it from macro economic perspectiv then common interst logic can give mush better results.

The Logic of Collective Action: Public Goods and the Theory of Groups is a book by Mancur Olson, Jr. published in 1965. It develops a theory of political science and economics of concentrated benefits versus diffuse costs. Its central argument is that concentrated minor interests will be overrepresented and diffuse majority interests trumped, due to a free-rider problem that is stronger when a group becomes larger.

Gunnar Trumbull rejects the observation by Olson and Lohmann that concentrated interests dominate public policy. Historically, he points out, diffuse interests nearly always found ways to be represented in public policy making, for instance by relating to retirees, patients or consumers. Trumbull says that the explanation for this lies with the role of legitimacy when interest groups promote policies. He argues that diffuse interests have a legitimacy premium when they manage to mobilize, while concentrated interests are viewed with suspicion. He describes the concept of legitimacy coalitions, which are coalitions between state policymakers, social activists or industry to support the promotion of certain policy. By having to form a coalition, the interests are more broadly represented. The post-war neocorporatist system is an example of such a coalition.