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Collective Action Meets Prospect Theory: An Application to Coalition Building in Chile, 1973–75

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Expected utility theory explains collective action as an attempt by individuals to maximize their gains. In contrast, my application of prospect theory to collective action suggests that people are motivated to participate in collective action by a fear of loss. These alternative rationalities are considered in the context of the successful cooperative effort of four economic groups in Chile during 1973–75, the first years of the Pinochet military regime. In this case, the logic of prospect theory better captures how actors made decisions about whether or not to engage in collective action. Of the four groups that did join the 1973–75 economic coalition, only one (the mineowners) appears to have maximized its net asset level, as expected utility theory predicts. All four groups seem to have been motivated to cooperate because they found themselves in the domain of losses and expected that cooperation with other, even rival, economic groups might help them recoup their recent losses.
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Keywords: Allende; Chile; Pinochet; economic coalitions; expected utility theory; free-rider phenomenon; loss frame and collective action

Document Type: Research Article

Affiliations: Mershon Center, Ohio State University

Publication date: June 1, 2004

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