Final answer:
The term 'free rider' in economics refers to someone who benefits from goods or services without paying for them, specifically about public goods. The free rider problem can lead to underproduction or a lack of provision of these goods and is often associated with incentives highlighted in the Prisoner's Dilemma.
Step-by-step explanation:
In economics, the term free rider refers to an individual who benefits from resources, goods, or services without paying for the cost of the benefit. This is commonly seen in the context of public goods, which are non-excludable and non-rivalrous, meaning that it is difficult to prevent anyone from using them, and one individual's use does not reduce availability to others.
The free rider problem arises when too many people choose not to contribute to a public good, which can lead to underproduction or complete lack of provision of that good. A classic example is public broadcasting where listeners can enjoy the programming without contributing to fundraising efforts. If everyone chose to free ride, the service might not have sufficient funds to operate.
An important aspect of the free rider problem is its connection with the Prisoner's Dilemma, where individuals have an incentive to act in their own interest rather than collectively, even though collective action would produce the best outcome for the group.