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Divide and Conquer: Noisy Communication in Networks, Power, and Wealth Distribution

  • Wilson Perez

    (Department of Economics, Cornell University)

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    In a society composed of a ruler and its citizens: what are the determinants of the political equilibrium between these two? This paper approaches this problem as a game played between a ruler who has to decide the distribution of the aggregate income and a group of agents/citizens who have the opportunity to revolt if they are unhappy with the distribution. Nevertheless, if too few revolt, the agents become defeated and receive zero consumption, while a successful revolt increases the consumption level of the rebels whereas the ruler receives nothing. Coordinated action by citizens is possible because they form nodes in a communication network. However, communication through the network is noisy, which removes common knowledge about the endowments and could preclude the emergence of collective action among citizens. In this paper, I argue that the network structure and the noise level are determinants of the political equilibrium and wealth distribution. The model explains how the ruler could use propaganda, cooptation and repression to increase his expected utility. The formalization of the game is accomplished using such concepts as p-beliefs and p-dominant strategy (Monderer and Samet, 1989, and Morris and Shin, 2002). Finally, I illustrate the model by applying it to cases in Nigeria and Zaire/Congo.

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    Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.33.

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    Date of creation: Feb 2004
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    Handle: RePEc:fem:femwpa:2004.33
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    1. Alesina, Alberto F & La Ferrara, Eliana, 2000. "Who Trusts Others?," CEPR Discussion Papers 2646, C.E.P.R. Discussion Papers.
    2. Morris, S., 1999. "Approximate Common Knowledge Revisited," Papers 987r, Yale - Economic Growth Center.
    3. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275R, Cowles Foundation for Research in Economics, Yale University, revised Aug 2001.
    4. Timothy Besley & Andrea Prat, 2005. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," STICERD - Political Economy and Public Policy Paper Series 07, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. Pranab Bardhan., 1988. "Some Reflections on the Use of the Concept of Power in Economics," Economics Working Papers 8896, University of California at Berkeley.
    6. Djankov, Simeon & Caralee, McLiesh & Nenova, Tatiana & Shleifer, Andrei, 2003. "Who Owns the Media?," Scholarly Articles 3606236, Harvard University Department of Economics.
    7. Daron Acemoglu, 2002. "Why Not a Political Coase Theorem? Social Conflict, Commitment and Politics," NBER Working Papers 9377, National Bureau of Economic Research, Inc.
    8. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
    9. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
    10. Stephen L. Parente & Edward C. Prescott, 1997. "Monopoly rights: a barrier to riches," Staff Report 236, Federal Reserve Bank of Minneapolis.
    11. Michael Suk-Young Chwe, 2000. "Communication and Coordination in Social Networks," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 1-16.
    12. Theodore C. Bergstrom, 2002. "Evolution of Social Behavior: Individual and Group Selection," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 67-88, Spring.
    13. Michael Suk-Young Chwe, 2000. "Communication and Coordination in Social Networks," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 1-16.
    14. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
    15. Paul Collier & Jan Willem Gunning, 1999. "Why Has Africa Grown Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 3-22, Summer.
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