212 8: Rational Choice Th eory and Irrational Behavior
is not supported by empirical reality. In a public goods setting, Ostrom has shown
that, given the opportunity to communicate, people are quite capable of solv-
ing social dilemmas through cooperation (Ostrom, Gardner, and Walker 1994).
In short, people are able to govern themselves. Reviewing the work on social
dilemmas and public goods games since, Ostrom (2003, 27) argues there are
distinct behavioral patterns that severely limit the applicability of rational choice
as a predictable theory. In particular, the fi rst move in a public good setting is
cooperation, not defection, as would be suggested by rational choice theorists.
Research from behavioral economics has demonstrated a strong tendency to
abide by norms of fairness, even in the absence of an external authority or in
cases of anonymity (Camerer, Lowenstein, and Rabin 2004). Also of note, com-
munication increases the likelihood of cooperation, and individuals tend to vol-
untarily punish those who fail to cooperate (Fehr and Gachter 2000).
Rational choice theory and the logic of appropriateness discussed in Chap-
ter 7 both depend heavily on the principal-agent model—that an external actor
wielding sanctions or incentives is necessary to achieve optimal outcomes. Os-
trom’s work demonstrates this to be incorrect. Mutually benefi cial relationships
can develop so long as there is a medium to facilitate and improve trust between
individuals. For Ostrom (2003, 49), the key factors are trust, reciprocity, and rep-
utation. Trust and trustworthy reputations create opportunities for cooperation
between individuals, cooperation that in turn tends to be reciprocated. A reputa-
tion as someone who is untrustworthy causes the breakdown of cooperation and
ultimately suboptimal outcomes.
A clear implication of Ostrom’s work is that institutions able to facilitate trust,
either through more open communication or more transparency, are likely to
lead to improvements in the organizational culture of the institution, and po-
tentially more benefi cial relationships. Communication, particularly face-to-face
communication, provides a signal of trustworthiness. Although Ostrom’s early
work tended to come to a similar conclusion as Tiebout, emphasizing “polycen-
tricity” (Toonen 2010, 194), her more recent work on common pool resources
(CPRs) provides a fresh alternative for public service delivery. For small-scale ju-
risdictions, competition between providers is not necessary. Th e notion that most
individuals lack perfect mobility is well accepted. However, this is not a limit
to the establishment of effi cient policymaking institutions. As Vincent Ostrom
would later comment, Elinor’s work was unique in that it placed an emphasis on
“human (as over and against) bureaucratic management” (Toonen 2010, 195).
Rational Choice as the New Orthodoxy
Rational choice mounts a challenge to the prescriptive arguments taken from
traditional public administration scholarship, and, some of its advocates argue,
should be adopted as the core paradigm of the discipline. Th ese advocates present
rational choice not simply as an economic framework that can be adopted to help