What are collective action problems?

Who's a what now?

Two criminals are caught by the police and interrogated in separate rooms. Each woman can either confess or stay silent. If both stay silent, there isn't enough evidence to charge them and they are indicted for a lesser offence. If one confesses, she can cut a deal but her partner goes to jail for a far longer time. If both confess, neither gets the deal and both are locked up for a long time.

The best course of action for either woman is to confess because no matter what her partner does, confessing leaves her better off. The problem is that if both women confess, they are far worse off than if they had kept their mouths shut. In essence, cooperation gives the best results overall but defection is optimal for the individual. 

Collective action problems are essentially scenarios where individually optimal actions lead to a worse overall outcome. You can conceptualise of them as multi-actor prisoners dilemmas, situations where the best course of action for everyone requires individuals to take actions which are not best for them. i.e: Fishermen have an interest in maintaining fish stocks which requires that they limit themselves to catching a certain number of fish per year, yet as there are so many fisherman the actions of a single boat will not affect the overall fish stocks to any significant extent. Hence fisherman have an incentive to and do engage in extensive over-fishing despite the fact that doing so destroys their industry.

Why do I care?

Collective action problems are interesting. They're a decent argument against Libertarianism or unfettered free markets generally. After all, the reasoning behind markets is that disparate actors maximising their own outcomes tend to produce socially optimal results. Not the case when it comes to CAP's (or any externalities for that matter, an externality being a transaction which effects third parties). They're also a prism through which to view certain social and political processes, especially dissent, ideological centripetalism and generally the way ideologies, especially totalitarian ones, tend to spread,