 Likewise, Ullman-Margalit (1977) uses game theory to show that norms solve collective action problems, such as prisoner’s dilemma-type situations; in her own words, “… a norm solving the problem inherent in a situation of this type is generated by it” (1977: 22). In a collective action problem, self-centered rational choices produce a Pareto-inefficient outcome. Pareto-efficiency is restored by means of norms backed by sanctions. James Coleman (1990), too, believes that norms emerge in situations in which there are externalities, that is, in all those cases in which an activity produces negative (positive) effects on other parties, without this being reflected in direct compensation; thus the producer of the externality pays no cost for (reaps no benefit from) the unintended effect of their activity. A norm solves the problem by regulating the externality-producing activity, introducing a system of sanctions (rewards).