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Cycles of risk

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  • Richard McKelvey
  • Jeff Richelson

Abstract

Much of the social choice literature has tried to skirt around the main conclusion which it has come up with. The literature seems to imply that the world is in disequilibrium, yet it keeps trying to model the process in terms of equilibrium models and to search for conditions which guarantee equilibria. The conditions which have been found for equilibrium when only pure strategies are used are so servere, we would seldom expect them to be met. But if the conditions for equilibria over pure strategies are servere, then the conditions for equilibria over risky strategies must be even more so, for risky strategies can, atbest, disrupt existing equilibria. In this paper, we have attempted to accept the deductions of the model, and to investigate, instead, the implications of this lack of equilibrium. We have argued that, in a large class of situations, it seems that we will get convergence in risk even if there is no euqilibrium. Moreover, the point to which the risk will converge may not be entirely arbitrary, i.e., the area of intransitivities, given that candidates adopt optimal responses to each other, may be a fairly localized region in the space. Copyright Center for Study of Public Choice Virginia Polytechnic Institute and State University 1974

Suggested Citation

  • Richard McKelvey & Jeff Richelson, 1974. "Cycles of risk," Public Choice, Springer, vol. 18(1), pages 41-66, June.
    • Handle: RePEc:kap:pubcho:v:18:y:1974:i:1:p:41-66
    DOI: 10.1007/BF01718496
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    References listed on IDEAS

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    1. Richard Zeckhauser, 1969. "Majority Rule with Lotteries on Alternatives," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(4), pages 696-703.
    2. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279-279.
    3. Davis, Otto A. & Hinich, Melvin J. & Ordeshook, Peter C., 1970. "An Expository Development of a Mathematical Model of the Electoral Process," American Political Science Review, Cambridge University Press, vol. 64(2), pages 426-448, June.
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    Cited by:

    1. Peter Aranson & Peter Ordeshook, 1981. "Regulation, redistribution, and public choice," Public Choice, Springer, vol. 37(1), pages 69-100, January.

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