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

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  • Wilson Perez

    (Department of Economics, Cornell University)

Abstract

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.

Suggested Citation

  • Wilson Perez, 2004. "Divide and Conquer: Noisy Communication in Networks, Power, and Wealth Distribution," Working Papers 2004.33, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2004.33
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    References listed on IDEAS

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    1. Djankov, Simeon & et al, 2003. "Who Owns the Media?," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 341-381, October.
    2. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    3. Stephen Morris, 1999. "Approximate common knowledge revisited," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(3), pages 385-408.
    4. 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.
    5. 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.
    6. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August.
    7. Edward C. Prescott & Stephen L. Parente, 1999. "Monopoly Rights: A Barrier to Riches," American Economic Review, American Economic Association, vol. 89(5), pages 1216-1233, December.
    8. Pranab Bardhan., 1988. "Some Reflections on the Use of the Concept of Power in Economics," Economics Working Papers 8896, University of California at Berkeley.
    9. Michael Suk-Young Chwe, 2000. "Communication and Coordination in Social Networks," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 1-16.
    10. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, vol. 96(3), pages 720-736, June.
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    12. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
    13. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
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    More about this item

    Keywords

    Non cooperative Games; Networks; Political economy; Development; Political processes; Rent-seeking; Conflict; Alliances; Coalitions;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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