Zakat : A Case Study of Constraining Free Riding in Charity

When the private incentives faced by individuals in a society are not properly aligned with their shared goals, a collective action problem arises. This paper focuses on the free-rider problem of aid, the collective action problem of getting people to contribute privately to charity. It examines a unique Islamic solution to this problem. The third pillar of Islam, zakat, imposes internal religious constraints on free riding. In other words, zakat serves as a mechanism to coordinate expectations and effective communication between Muslims to mitigate the potential for free riding